Outsourcing, The New Paradigm in Productivity?

Michael Porter at World Economic Forum.

Business Strategy Guru, and Harvard professor, Michael Porter defines productivity "As the value created in a days work" and emphatically says "The value created in a days work sets the wages you can earn". How true! You couldn't articulate individual, organisational or national productivity any better. Any more clearer.

Outsourcing can help increase value created in a days work and it is my belief, organisations who strategically outsource its low value, mundane, or non core tasks can significantly increase its productivity, if done well.
By outsourcing non core activity it allows greater focus on higher value creating tasks within the organisation, the acute specialization of a firms value chain. Staff can be moved / retrained to focus on higher value creating, higher fee earning business, working closer to the customer. Companies that outsource will grow not shrink, and as they grow will create more, higher value employment opportunities contrary to to popular beliefs of increasing unemployment.

The acute specialisation of value chain achieved by outsourcing will also help firms be stronger and to withstand tough market conditions due to inbuilt efficiencies. A lot more resilient than those who are slower to move. Apple, Virgin and the major Australian banks are some of the best examples, even the global financial crisis, the worst economic times we have ever seen, they grew and all made multi billion dollar profits when hundreds if not thousands of less efficient firms were going to the wall.

Yet the words, outsourcing or outsourcers, spell fear in most ranks within firms and nationally. Most feel initiatives to outsource will increase national unemployment. When computers were being widely introduced in corporate and government organisations in the 80's and the 90's we had the very same fears. We feared that computers would take our jobs away. We would lose control of our departments and our organisations and security would be significantly weakened and compromised.

When we now look at the paradigm of efficiency brought about with advent of computers, it is cleat that unemployment which averaged around 5.2% in 2012 is nearly half of the 9's, 10's & 11's we were experiencing most of the 1990's. Computers helped transform organisational productivity and change the paradigm of work itself, in the private and the public sector. Today we can't operate without computers even in our homes let alone at work.

If you talk to a firm of accountants today about outsourcing their mundane work, the work their staff have their head buried in, their usual fears are loss of control, security and jobs. This is no different to our fears with computers back in the day. It is the same if you speak to most firms about outsourcing their software development or the mere maintenance application software. I well remember how a CFO asserted to me in the mid 80's "these computers will take away our accounting jobs and we will have no training grounds for young accountants". I wasn't brave enough to tell him as a young consultant his fears were unfounded and he was wrong but history has proven so. Especially considering the importance, and the growth of the accounting profession today. It is the same for many other professions and industries.

Outsourcing if done well, with clear objectives, implemented with skill, can bring in significant improvements in productivity and value creation for all types and sizes of organisations. Small, medium, big, and the public sector. If done badly for the wrong reasons, unclear goals or implemented poorly it will be like those bad computerisation projects we have all heard of and know. The blame we often leave with the outsourcers or the software providers and not where it belongs

If we as employers embrace outsourcing we can help our staff move up the value chain, adding greater value and creating increased opportunities for income and efficiency. I was one of those people that helped usher in computerisation to firms in the mid 80's to the 2000's.  Today I believe outsourcing   can help strategically transform organisations and its competitiveness. Like anything, to do it successfully, you need to do it right and for the right reasons.


Dinesh De Silva is CEO of Nexgroup Asia Pacific, he and his team are available to speak to media /  organisations or groups as a keynote / guest speaker on the above. Contact him +612 8003 3342, via twitter @dineshdesilva or www.nexgroup.com.au 

NexGroup Asia Pacific, is a World Class Outsourcing business, providing Software development & Accounting, Finance and Legal BPO Services. 

Australia's 2020 Goals for a Digital Economy

National Digital Economy Strategy was launched today at CeBit 2011 by  Communications Minister, Senator Stephen Conroy. Additional investments to facilitate the strategy to be announced.

The Government defines the digital economy as a globally connected network of economic and social activities enabled by information and communications technology. The Digial Economy Strategy encompasses goals for eCommerce, eHeath and distance education. 

To measure progress in realising its vision by 2020, the government has set the following goals. Worthy goals that can clearly propel our nation as a leading digital economy.  It will now take courage and the discipline to implement these strategies to fruition by 2020. 

Lacking in Vision

I have discussed below what I feel is however significantly lacking from the core of its strategy. The strategy to build an army of Australian firms that lead this digital world. The goals outlined will essentially make us good consumers of a digital world, my vision however is to see our nations firms playing a significant role in the creations of the digital world in helping create companies like Google, Facebook, Amazon, Twitter, eBay. It is important for government to drive that strategy as a core to building a digital economy. More on this after the summary below.

Broadband

Australia ranks in the top five OECD countries in the portion of households that connect to broadband at home.

Business

Australia ranks in the top five OECD countries in relation to the portion of businesses, and not for profit organisations, using online opportunities to drive productivity improvements, expand their customer base and enable jobs growth.

Sustainability

The majority of Australian households, businesses and other organisations will have access to smart technology to better manage their energy use.

E-health

As identified in the National E-Health Strategy endorsed by the federal, state and territory governments, 90 per cent of high priority consumers such as older Australians, mothers and babies and those with a chronic disease, or their carers, can access individual electronic health records.

By July 2015, 495 000 telehealth consultations will have been delivered providing remote access to specialists for patients in rural, remote and outer metropolitan areas, and by 2020, 25 per cent of all specialists will be participating in delivering telehealth consultations to remote patients.

Education

Australian schools, TAFEs, universities and higher education institutions will have the connectivity to develop and collaborate on innovative and flexible educational services and resources to extend online learning resources to the home and workplace; and the facilities to offer students and learners, who cannot access courses via traditional means, the opportunity for online virtual learning.

Teleworking

Australia will have at least doubled its level of teleworking so that at least 12 per cent of Australian employees report having a teleworking arrangement with their employer.

eGovernment

Four out of five Australians will choose to engage with the government through the internet or other type of online service.

Digital divide

The gap between households and businesses in capital cities and those in regional areas will have narrowed significantly.

All noble intentions, lets hope the government has the courage and the discipline to imprlement these strategies to realise these objectives by 2020.

Still lacking as part of this core vision and the strategy is a vision to help build Australian technology firms and talent to create enterprises that will lead the world in the digital economy taking advantage of the nations significant brand equity and creative talent.   The US has done this successfully through building its IT Industrial Cluster, the Silicon Valley, that help build companies like Apple, Google, Yahoo, Facebook, Adobe, YouTube, HP, etc etc... creating a trillion dollar export market.

Even Nations like India and  Ireland have built huge national capabilities with strong vision. Unfortunately the ministers vision is clearly lacking on this part! Australian companies given the national focus, supported by a Industrial/IT Cluster in its true sense (Michael Porter, Competitive Advantage of Nations) can take this nations talent to achieve in new vistas, not seen before but completely within the Australian capability.


(Summary of goals courtesy - Australian CIO Magazine 31 May 2011)

Dinesh De Silva is CEO of Nexgroup Asia Pacific, he and his team are available to speak to media , organisations or groups as a keynote / guest speaker on above. Contact him +612 8003 3342, via twitter @dineshdesilva or www.nexgroup.com.au 

NexGroup Asia Pacific, is a World Class Outsourcing business, providing Software development & Accounting, Finance and Legal BPO Services.

Technical Skills : Java, Microsoft Dot Net, PHP, Python, Ruby, C#, Android, Iphone,  CA Service Desk, CA ITSM,  CA NSM,, Spectrum, , eHealth. 

Outsourcing Include : Offshore &  OnShore software development, Software maintenenace, Outsourced developers, Offshore Accounting ,  Bookkeeping,  Online accounting,, Account Payable outsourcing, Offshore accounting, Legal Process Outsourcing  (LPO), Legal Services, Paralegal Services, Litigation support, Document Review, Offshore Legal Processing, Legal Research, Legal resources