Week 1 Managing Global Outsourcing

In my reflection for Mr. Higgins last module (Managing Design and Development) I decided that one of my future goals for Mr. Higgins module (Managing Global Outsourcing) was that I would post up my thoughts and notes on the weeks readings, as a platform for potential discussion. In the future I hope to have these blogs posted before class, however given the readjustment back into college life this blog reflects back on week 1.

In week 1 our readings were; 

Chapter 1 of The Handbook of Global Outsourcing and Offshoring by Ilan Oshri, Julia Kotlarsky and Leslie P. Willcocks 

The first chapter of the book gave an introduction into some of the jargon used and interesting facts on the most common reasons for outsourcing and backsourcing.

What surprised me most was that 70% of companies outsource to reduce costs yet, 78% of companies backsource because of unclear value for money. That is a very clear contradiction, one possible reason for this is the very narrow outsourcing definition given in the book

"Outsourcing is defined as contracting with a thrid-party supplier for the management and completion of certain amount of work, for a specific length of time, cost and level of service"

This description says that outsourcing should be at a specific cost, yet clearly that is not true for 78% of companies.

Main Drivers of Outsourcing.
Source: The Handbook of Global Outsourcing and Offshoring by Ilan Oshri, Julia Kotlarsky and Leslie P. Willcocks

Main Drivers for cutting back or bringing back outsourced services
Source: The Handbook of Global Outsourcing and Offshoring by Ilan Oshri, Julia Kotlarsky and Leslie P. Willcocks

So I have proposed my initial definition of what I think outsourcing is;

"Outsourcing is contracting with a thrid-party supplier for the completion of certain activity, in order for cost saving or exploiting opportunities that cannot be accessed with current talent or resources".

I will review this at the end of the semester and see if I have changed my definition of the term outsourcing.

Harris, M. 2012. Outsourcing is so last year [Online]. Seattle: The Economist. Available: http://www.economist.com/blogs/babbage/2012/05/future-customer-support

The article talks about a race to the bottom in terms of technical support. India steam rolled ahead, followed by Philippines’s who’s western tone gave them a slight advantage, in terms of being a more suitable nearsourcing partner for the western world.  

As with these races to the bottom no one really wins, it's a zero sum game. However there is this new direction that is coined in the article called "unsourcing".

I had a few problems in terms of this "unsourcing" label. I don't think unsourcing is different to nearsourcing at best it's a different variation. The principles of both nearsourcing and unsourcing remain the same, a company is bringing previously outsourced activities nearer in terms of culture, language, norms etc. If we take the example of GiffGaff (used in the article) who actively encourages peer to peer issue resolving then it surely it can be seen as nearsourcing? Or maybe is it a new type of backsourcing?.