The business of outsourcing – what you need to know

Looking at outsourcing is often a stand-alone feature for some organizations, whereas, for others, it spans across multiple departments.

It is a noteworthy function in many foreign businesses, as much as it is for countries who carry out fulfillment – including South Africa.

Whereas manufacturers, telecoms providers, technical and IT providers all participate in outsourcing, we will focus more on services vs goods and manufacturing. That is not to say that manufacturing is insignificant, but it is often more complex.

The more we hear the US presidents say “American jobs for Americans” and Brexiteers say “British jobs for British workers” – the more we see service jobs being outsourced. The realities that these folks overlook are:

US and UK employment levels are at record levels, making it harder to find local talent,
The cost-saving factor of outsourcing makes the company more competitive, which no president or politician can negate, it is a surging trend, not a declining trend – despite all the talk we hear of “de-globalization”.

How does outsourcing work today?

Companies have a choice to either recruit people directly once they set up an offshore branch, or to work via intermediaries such as Peopleperhour and Upwork.

The latter would take a commission and is mainly used to find individual workers who “work from home”, as opposed to an office location which involves further overheads and management. Lately, smart recruiters and outsources simply use Linked-in to find profiles abroad, bypassing the middleman.

Intermediary web-based solutions try to cling to their market share, quite successfully, by using a skill verification process and a review system – covering skills and customer feedback. This, in turn, minimizes risk for recruiters since the worker needs to maintain good ratings to continue benefiting from the ecosystem.

Who benefits the most from outsourcing?

Companies can save as much as 60% and reduce their burden to comply with stringent employment laws, which can be a hindrance to business growth in some cases.

They also tap into new sources of knowledge – and create brand awareness, often with a wider following abroad simply by means of having a workforce globally.

Furthermore, the time-zone advantage means that in some cases, when a management team issues a specification at the end of their day – another team starts to work at night. The next morning, the management team turn on their PC and find the work completed.
Individuals in service delivery countries such as India, South Africa, Mauritius and others, often earn 30 to 50% more by working for a foreign entity. They also win by tapping into stronger economies – such as the USA, where unemployment is very low.

Furthermore, they get exposure to business systems on a larger scale, including HR practices that can sometimes be refreshing compared to local ways of doing things.
Examples of companies who outsource to SA, are Impact Radius in California, Paypal, Barclays UK, WordPress and several others. If you have some digital marketing research skills, you can easily find out who makes use of SA talent and approach them for a position.

Benefiting from outsourcing – for workers

There are two things you need to be successful: Excellent, relevant skills and good reviews (social proof).

Remember that when outsourcing a job, companies need an additional layer of trust. They rely on profiles of users with good reviews and endorsements. In exceptional cases, they might issue a trial project where social proof is absent. As far as relevant skills are concerned, building a good Linked-in profile with skill endorsements is a great way to start.

South Africans have a historic opportunity to participate in this lucrative market. Unethical practices on the Asian continent, where sometimes workers used one profile and passed on work to friends who couldn’t deliver, or pretended to work “full-time” for up to 5 employers, had an impact.

Recruiters are now looking elsewhere to find talent with strong ethic, good levels of English and a positive attitude – something that the SA workforce is often commended for.

Conclusion – what is the take on the business of outsourcing? 

The outsourcing business is here to stay. We find it in digital marketing, IT engineering, programming, basic data services, customer care, accounting and an array of other services.

Nationalism from abroad will not stop this trend since business leaders have their own level of pragmatism and ways to ensure continuity.

Whether you’re an individual seeking to tap into this job market – or a business seeking to benefit from it, it makes sense on multiple levels. It is a way to make the world smaller and to build bridges that can last a lifetime.

Ghostwriter of article. Published in thesouthafrican.com.[Text altered].