The Deal
Sunday, November 8, 
6:56 am

Deliver us from labor arbitrage

Posted on November 12, 2007 at 2:27 PM
Filed under: Outsourcing
[ Share ]  [ E-mail ]  [ Leave a Comment ]

Pop quiz: Identify the source of this quote: “U.S. companies increasingly are sending jobs offshore to save money.”

If you answered every mainstream media article or interview on the subject of outsourcing published or broadcast since the last presidential election, then give yourself a pat on the back. Now that we’re at the point where electioneering is on the front page again every day, iterations of the quote are getting bandied about by politicos of all affiliations.

But outsourcing’s value does not stem from what the economists like to call “labor arbitrage.” Nor is outsourcing solely about achieving the “final mile” of efficiency by taking an already robust business process and dumping it in a cheaper locale. And yet the trite stereotypes persist, with so many people not involved in important business decisions continuing to believe that companies only outsource to lower costs. Rather than run through the litany of reasons how we arrived here, I’d like to take the high road and suggest what companies can do to counter the clichéd perceptions.

• Don’t write contracts based on effort; instead hire a sourcing with language that insists on achieving a “managed services” relationship.
• Encourage your provider to innovate and even invest in the relationship over time.
• Do NOT focus on resources or processes; instead focus on services provided.
• Always stress the human element: Favorable costs should flow from expertise that improves overall efficiencies, not just cheaper head count.

Outsourcing is a program of change, and companies need to start telling the positive story about their sourcing improvements, not just reacting to negative and misguided coverage about “lost jobs” for Americans. The benefits that accrue to a company that expertly employs outsourcing are a rising tide that lift all fortunes, including those of the average American worker. — Peter Allen

Peter Allen is a partner and managing director for market development with the sourcing advisory firm Technology Partners International. You can reach him at peter.allen@tpi.net.



Join Corporate Dealmaker's LinkedIn forum

Comments
Post a comment


Search


Search For

Corporate Dealmaker Video


Linklaters' Schmidt on Pfizer-Wyeth review

Linklaters' Schmidt says how regulators handled Pfizer Inc.'s acquisition of Wyeth is an outlier of how others merger reviews will be conducted.
Decade of The Deal


Movers & Shakers


Juergen Lasowski
Onyx Pharmaceuticals Inc.

Edward Swallow
Northrop Grumman Corp.

Owen Mahoney
Outspark

Alice Kim
FLO TV Inc.

Eric Hausler
Isle of Capri Casinos Inc.
Juergen Lasowski, Onyx Pharmaceuticals Inc.
Edward Swallow, Northrop Grumman Corp.
Owen Mahoney, Outspark
Alice Kim, FLO TV Inc.
Eric Hausler, Isle of Capri Casinos Inc.


COMPLETE MOVERS & SHAKERS ARCHIVES

The Magazine


MACDdec1cover.gifAnd the winners are...
Even in a period when things like toxic credit default swaps and noxious structured investment vehicles dominate the conversation in many parts of the deal community, people are still willing to take the time to recognize skill and achievement in the strategic transactions that help those companies adapt and grow.
View the complete issue


Last Issue
Archives
Suggest a topic
Purchase a reprint
Subscribe to The Deal


Monthly Archives


Syndicate

Contributors

footspacer.jpg footspacer.jpg footspacer.jpg footspacer.jpg footspacer.jpg


©Copyright 2009, The Deal, LLC. All rights reserved. Please send all technical questions, comments or concerns to the Webmaster.