What Can’t Be Outsourced?
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What Can’t Be Outsourced?

What Can’t Be Outsourced?

Offshoring and outsourcing are as interesting as they are controversial. Many people see jobs leaving their countries of residence – and this is frustrating or confusing when there is unemployment.

Yet, many don’t see that the professional workforce in the U.S. is shrinking; it will be reduced perilously when people over 65 retire. There is not enough skilled new labor entering the workforce to alleviate this exodus of workers. This work MUST be outsourced, or it will not get done. The skilled, specialized, and available workers needed to keep running businesses are simply not here.

In the U.S., 10,000 Boomers are hitting retiring age each day, and they are leaving the workforce in droves. This work-hard generation has put in their time and are now hoping to spend more time with their grandchildren.

Good for them, BUT according to a thought-provoking McKinsey report from November 2012 ‘Employers in advanced economies may soon, for example, be unable to find as many college-educated workers as they require. Research from the McKinsey Global Institute finds that in the United States, the gap could reach 1.5 million graduates by decade’s end.‘ (The ‘why’ is simple: for a number of reasons, Generation Y has not had as many children as generations have had in the past).

We are going to see a large talent crisis – imminently – that will cause a formidable problem for businesses. That means that, unless something drastic occurs, the work that would be done by 1.5 million professionals will not get done. But, the problem is fixable. In comes outsourcing.

Task-based vs. ‘Interaction’ Work

But first you need to understand the difference between task-based work and ‘interaction’ work. Both types of work are key to doing business, but interaction work is the fastest-growing category of employment in developed countries. Interaction work is what it sounds like: people-based, service-oriented, non-offshorable functions. Or is it??

Typically, businesses have outsourced transactional or task-based work over ‘interaction’ work; it is easier to send data processing, research, defined design work, call center support, insurance claims processing, analysis (financial, medical) offshore. ‘High touch’ work never used to be a candidate for outsourcing and offshoring, but it is now. How do you figure out what kind of ‘interaction’ work can be outsourced?

Chunking the Work

The McKinsey article talks about ‘carving off’, ‘hiving off’, and ‘splintering’ work; they write that offshoring will be about ‘disaggregating’ jobs. I have also heard this process as doing ‘task design’ or ‘chunking’ work. It is all the same thing: defining, anew and with the current workforce demographics in mind, what can be outsourced.

It is the process by which a company will define what the chunks of work will be and by whom those chunks will be performed. The where doesn’t matter, and the how is not in question, with broadband, cloud computing, and online collaboration tools. So:  

Can a services company ‘carve off’ initial phone calls to client prospects? Can a financial services firm outsource the selecting of ‘right’ investments for clients of a certain profile?

Certainly, in both cases, leaving an account manager or financial planner to engage after these tasks has been done. You can be sure that many Fortune 500 businesses are already defining what can be ‘carved off’ and sending this work out.

Availability Matters

To be sure, the key to this talent model is the availability of workers with specialized skills who are willing to work as and when the work needs to be done. Recruiting and training will need to occur, but first this redefinition of one work package into multiple will need to occur.

The job of outsourcing (offshoring, managed services, crowdsourcing) companies is to help their clients decide what to carve off, and then how to do it. The job of these firms is also to find these resources, and train them. Only the most creative outsourcing firms will succeed at this, and help clients’ high-level employees focus on their highest-level work, enable productivity to increase, and drive costs to decrease.

Post your comments! Again, we are all friends here. What else can be offshored? Are you heartened by or frustrated by this reality (that probably depends on your job)? Do you have a different perspective or want to bring other facts to the discussion?