June 14, 2021

Is outsourcing destroying job opportunities?

Outsourcing is often seen as a plague of the employment market, a job stealer, and a market destroyer. It is easy to draw this conclusion when looking at outsourcing as a substitute for employment rather than an alternative. We see outsourcing as the following step after a forced downsizing. That means the downsizing did not come from a lack of request but rather from a management decision to cut costs. Although it is highly embedded in our society to look at nearshoring or offshoring this way, it is not usually the reality.

Working for 112 Hub, a consulting company that helps enterprises make outsourcing decisions, I have stumbled upon many companies looking for outsourcing for different reasons.  I always thought that my experience might not be enough, so I also asked the rest of my colleagues from The Netherlands and Greece who are enterprising looking for outsourcing.

From my experience, people from Germany are usually looking for outsourcing when it comes to developing a new product or personalising a particular internal operations system, often acquired as general solutions from other companies. As this kind of project usually is short, it makes more sense to outsource it to prevalidated professionals to avoid overstaffing. In this case, we can argue that outsourcing is helping to prevent downsizing later. 

According to my colleges’ experience, the Dutch market is focused on outsourcing the technical specs to boost their business from concept to reality.  Many Dutch companies are more focused on user experience than tech. Therefore they are building their medium by outsourcing the construction of it to other companies. This allows them to focus on business and contact the final clients.

Our Greek correspondent told us that the Greek market is usually looking at outsourcing as an option of penning an office in another country. Usually, they are looking for a company that can accommodate a dedicated team for their project.  In this way, they can afford to focus on sales here in East Europe. Once the contracts are nested, the company from Greece are transferring their collaborators to their new entity in East Europe.

In the US, although a fearly new market approached us, we saw a tendency to attract start-up companies looking for a technological specification paper that could be followed in the product development.

As you can see, worldwide, people are using outsourcing in any way but not for downsizing their company.

I would argue that outsourcing is actually growing the number of relevant job opportunities by creating new services or creating new companies and markets entirely. Unique features of the business mean attracting a new market or increasing the visibility on the same market, leading to the team’s extension.

As for the country’s economy, outsourcing allows the government to focus on a specific talent pool and develop their education and taxation system around that job. Not only for the country where the project is outsourced as also for the country that outsources work.

Nearshoring or offshoring can easily represent the beginning of setting up SMART goals without risking spreding the team’s focus. It can also allow for fast development and take advantage of an inevitable trend on the market. If there is a trend of building machine learning systems that can improve productivity, finding the right engineers at the right price will not be an easy job. Allowing another company to start your project with prevalidated engineers will allow you to focus on sales or business planning.