Evolution of Outsourcing: Outsourcing via the Cloud

The historical context

Services Outsourcing started in earnest in the 1990s – around 30 years ago – primarily as a means for achieving savings via Cost arbitrage.

At that point of time, internet connectivity did not really exist. Communication was via phones. The first Service providers to enter this market were players like TCS, Wipro, Infosys, Patni, etc.

The world has changed since then. Some of the key drivers that are impacting the world of work performance, are:

Cloud computing ², in around 2006.
Agile methodology ³, which took off in around 2000, but started picking up steam in 2010 or so.
Kanban ⁴ based Project management, which was developed in around 1940, and was adopted in the software development domain between 2004 & 2007.
Collaboration tools ⁵, which started as Groupware in the 1980s with Lotus Notes, etc, and then evolved into its various forms – Social Media platforms, Messaging platforms, Workflow systems, Workspaces, etc – slowly starting around 2004, and then far more rapidly by around 2010.
Video meetings ⁶, which started way back in 1930s, but moved to its Internet-based/ Phone-based form initially in 2003, but then started taking off faster in 2010 with Facetime. And we all know what happened with Zoom, Google Meet, & Microsoft Teams in 2020, with the advent of Covid-19.
Wide acceptability of remote work ⁷. Remote work has been a widely acceptable practice for a long time, specially in the Knowledge work domains. But with the advent of Covid-19, the entire world was forced to move to Remote work, and Businesses are now realizing that this may be a direction that is not fully reversible.
Virtual teams ⁸. Given the wider acceptability of remote work, the appeal and relevance of virtual teams has also increased significantly.
Hybrid workforces ⁹: Scaling from a purely Internal virtual team to a Hybrid workforce – a team that is comprised of team members from both in-house (within the Business organization) to external (Contractors, Freelancers, etc) – is a natural evolution that is already happening.

What this means is that several forces are now converging to a pivotal point, where Performance of work can now evolve from its

“Centre of gravity of work performance = where the team is located”

to just

“Centre of gravity of work performance = wherever (platforms/ tools) the work is performed”.

What’s new about this model?

Outsourcing Service Providers traditionally work by engaging their teams on a co-located or remote work basis, and then use multiple tools for managing their teams and projects, for performance of contracted work.

The engagement of an Outsourcing vendor by any Business Organization is performed manually today, using the standard process flow of Tendering/RFP → Proposal → Contract. The minimum lead time for this process flow would be at least 2-4 months for a small engagement, and significantly greater for large engagements.

In Outsourcing via the Cloud, on the other hand, this engagement is sped up by moving the vendor engagement to a marketplace, with the outcome being that the Engagement lead time is cut down to a matter of weeks.

The speed of engagement is not the only benefit that is offered by this model – it will also offer other significant value propositions, such as:

‘Easy as 1-2-3’ Service Provider search & engagement
Wider talent pool not limited by Geography or timezones
Easy scalability & deployment of Internal/ External/ Hybrid teams
Cost effectiveness, by minimizing sunk costs & rework costs
Faster time-to-market, by containing time-to-contract, and by reducing rework
Improved project delivery visibility, controls & efficiency,
Enhanced team alignment across the board, and
High trust, due to highly granular controls & Pay-as-you-go mechanisms that enables expectations matching & trust for both the Demand & Supply sides.

The Outsourcing-via-the-Cloud model

Attached please find an infographic that explains the Outsourcing-via-the-Cloud model.

References

The Outsourcing Revolution: https://www.economist.com/media/globalexecutive/outsourcing_revolution_e_02.pdf
Who Coined ‘Cloud Computing’?: https://www.technologyreview.com/2011/10/31/257406/who-coined-cloud-computing/
The History of Agile: https://www.planview.com/resources/guide/agile-methodologies-a-beginners-guide/history-of-agile/
From supermarkets to software: History of Kanban: https://getnave.com/blog/kanban-history/
Collaborative software: https://en.wikipedia.org/wiki/Collaborative_software
The History & evolution of Video conferencing: https://whatis.techtarget.com/feature/The-history-and-evolution-of-video-conferencing
What’s next for remote work: An analysis of 2,000 tasks, 800 jobs, and nine countries: https://www.mckinsey.com/featured-insights/future-of-work/whats-next-for-remote-work-an-analysis-of-2000-tasks-800-jobs-and-nine-countries
Getting Virtual Teams Right: https://hbr.org/2014/12/getting-virtual-teams-right
Establishing a Remote and Hybrid Workforce: https://www.gartner.com/en/human-resources/trends/establishing-a-remote-hybrid-workforce

Publishing history

This infographic and related content was first published on the GigsBoard Blog, between July & August 2021.