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Is knowledge-worker outsourcing to low-cost economies the unavoidable natural evolution of virtual teams?

Europe and the US are running scared of the outsourcing of 'knowledge work' to places like India and China. Outsourcing of manufacturing is now normal practice. Outsourcing of white-collar work, with its off-shore call-centres and operations centres, has now been happening for the last 5-10 years. A new phase of outsourcing has started - it focuses on those types of 'knowledge work' where there is minimal need for face-to-face customer interaction.

Newsweek references a recent OECD study which concluded that this new wave of outsourcing creates 15 at-risk job categories representing up to 19% of total employment in the EU.

The question is where will it end?

The Article quotes an Indian executive boasting "From life sciences to financial consultancy we can do any of these jobs".

They can also do them at 10% of European and US Salaries!

In an on-line poll nearly two-thirds of the respondants agreed that "Stiffer competition from India and China a threat to middle class jobs and wages?"

Newsweek. May 30, 2005, Does Outsourcing Spell Doom for White- Collar Workers

What does it mean for virtual team workers

• What does this mean for our virtual teams?
• Is it just a threat or are there opportunities too?
• Can we compete with it?
• If we can't compete with it can we co-evolve with it into something mutually beneficial?

'Knowledge-work Outsourcing' is here to stay and it will grow

If we take an evolutionary view of organisational teams I would argue that this migration of knowledge-work and jobs to low cost economies is the natural and unstoppable evolution of virtual teams.

It cannot be ignored or avoided!

Is it all cons and no pros?

Ignoring the social argument of the benefits to humankind of the work going to these less affluent countries I would still argue that knowledge-work outsourcing can be a good thing for us and our virtual project teams for at least two reasons:

Firstly it is taking away project work we may not be doing well

Virtually Networked Teams are a relatively young phenomenon in Management Theory terms so there is actually little hard evidence available for how well or badly they have been performing. However one of the earliest forms of Virtually Networked Team was the IT Project Team.

By its very nature such teams were cross-functional and thus Networked as they involve a mix of professions (e.g. IT, Change Management and Business Staff). They were also Virtual as they grew from small analytical teams through large development teams to medium size implementation teams adding and dropping members along the way.

Quite a lot of statistics are available about IT Project Teams and they are shocking, for example:

• Only a third of change initiatives achieve objectives (OPP Survey May 2004)


• 74% of IT Projects are unsuccessful (Standish Group Report 2000)


• Only 1 in 5 IT Projects are likely to bring full satisfaction to their organizational sponsors (OASIG Study 1995)

We either need to decide to do this work better or let it go off-shore

Secondly it is taking away work we should not be doing

You need to examine your project work to ensure that you are clear where the real value to your customers is.

Inevitably the real value comes from co-invention interactions with customers which involves design and creative work based on deep empathy and listening skills.

If you are in any doubt you just need to ask your customers "where do we produce the most value for you"? This is "core" work - anything else is "context".

Context is highly outsourceable - there is always somebody who can do it better or cheaper.

Also what is core this year, with advances in technology, can become context next year according to Geoffrey Moore ("Living on the Fault Line - Managing for shareholder value in the age of the Internet")

So what should you do about knowledge-work outsourcing?

Embrace it!

Rather than think of knowledge-work outsourcing and outsourcers as 'the enemy' you need to find away to include outsourced knowledge-workers and organisations in your virtual networks and virtual teams.

One of nature's strongest forms of evolution is "symbiois" which can be defined as 'the long-term co-evolution of two independent species for mutual benefit'.

You should find and devise ways to 'co-evolve symbiotically' with 'enlightened' off-shore knowledge-work outsourcing partners, practitioners and networks.

In this way you can create 'co-sourced virtually networked teams" which have the best blend of resources to satisfy your customers - a '1-stop shop' virtual team!

These kind of moves will ensure your virtual teams stay at the leading edge of organisational evolution and make outsourcing a great opportunity not just a threat.

Thanks to Robin Good for a great conversation and ideas on this post

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Beyond Multinationals: a new corporate structure emerges

December 29, 2005 | article by Ken Thompson in Book Reviews (37)

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