The Rational Outsourcing Blog

Friday, September 01, 2006

So why did I start this blog and www.totalcostoferrors.com

I was born in India, and will always remain a proud Indian. I have also lived in the US for most of my adult life and I have gained a deep appreciation of the American people. I believe both Americans and Indians share a common vision of the individual’s right to compete based on his or her inherent abilities. Both nations are natural allies, yet the current negative sentiments regarding outsourcing are building a wall between us. Indians are pained by web commentary regarding “Indian slaves” stealing American jobs. Americans are equally frustrated by their apparent helplessness in the face of globalization.

America was founded on the vision that if you work hard you have a fair shot at success. Americans today believe that they are competing against Indians and Chinese on labor costs. This is rightly viewed by them as a game in which the odds are unfairly stacked against them. The anti-outsourcing brigade however claims that Americans are somehow owed a job. The American dream promises a fair shot, not a guaranteed shot at success. Both visions patently jar with the American dream.

I believe that a focus on quality and the Total Cost of Ownership of Business Processes can provide a way out of this conflict. My belief is based on my conversations with over 250 US executives, 20 outsourcing vendors, and hundreds of Americans and Indians.

Quality is of paramount importance to the Total Cost of Ownership of outsourced business processes. (Please visit www.totalcostoferrors.com for evidence supporting this claim.) Hence, relocating a process to a low-cost country is much less important per se than achieving the highest level of quality possible. Under this paradigm, workers across the world would be able to compete equally for their slice of the Business Process market based on their ability to provide the highest quality, not just the lowest labor costs. If US employees meet their employers’ financial goals through quality improvements, there may be no incentive for outsourcing to low cost locations.

This is not an anti-outsourcing message. The reality is that the best outsourcing firms deploy the latest technologies, invest heavily in best practices, and thus often provide significantly better quality. However, many upstart BPO firms are focusing merely on cost reductions and are ill-serving their customers.

We need to explicitly and aggressively shift the outsourcing debate to focus on quality. This focus on quality would present American workers a fairer competition, and one that they have a chance of winning. At the same time, the focus on quality would actually give the best outsourcing firms a competitive edge and increase the benefits their customers gain from outsourcing. I invite you to this open forum to discuss these issues.

Possible bias disclosure: Arijit (Apu) Sengupta founded a company that is focused on monitoring and improving the quality of outsourcing vendors and on helping companies meet their financial goals through quality improvement as a possible alternative to outsourcing. While this may bias his view of the world, Arijit believes this merely proves he puts his money where his mouth is.

Labels: , ,

5 Comments:

  • Apu,

    Congratulations on all your success so far, and for the great mention in Tom Friedman's column today!

    I've read your posts, and I really agree with your "rational outsourcing" philosophy - keep up the good work.

    I'm the editor of a blog that my colleagues and I started to discuss all aspects of offshoring/outsourcing, both good and bad. When you have a moment, please check us out:

    http://blog.a2xconsulting.com/

    I'd love to hear your thoughts.

    Best Regards,

    Paul Orefice
    Editor
    A2X Consulting Blog

    By Anonymous Paul Orefice, at 8:33 AM  

  • I think you got it wrong. The reason for outsourcing is to cut costs. If as an American worker I provide quality to whatever I do, the cost of my work is still high. Low-cost labor+ quality is what is needed.

    Also outsourcing needs to be well managed to reap the benefits...or a company should have an office in the land where they intend to outsource their work(like Oracle, MS , IBM et al have). Small companies should not embark on this as communication and time differences can ruin the rewards envisioned.

    In 20 years time outsourcing will be no longer profitable. Outsourcing and building applications in-house would cost the same(low-cost labor costs would creep up) Till then India would have a good ride. Save money Indians :)

    Neal

    By Anonymous Anonymous, at 7:44 PM  

  • Thanks for sharing your experiences. I know that there are a lot of people who are interested in blogging for different purposes.

    By Anonymous call center outsource, at 11:59 PM  

  • Good to see things coming together. Looking forward to the more of your posts, any ideas on what it will be? I will right away grab your rss feed to stay abreast of any updates. Fabulous work and much success in your business efforts!

    Regards,
    Tina

    By Anonymous Call Center Philippines, at 2:18 AM  

  • Congratulations on your success and here's to wishing you more. I do think companies do outsource as a means to cut costs. Most companies resorted to it during the recession to better deal with it.

    By Anonymous Call Centers Philippines, at 7:53 PM  

Post a Comment

<< Home