Outsource Issue 23 - (Page 94)
Labour arbitrage has been one of the key drivers of the global outsourcing boom. But for how much longer? And which organisations are best placed to make the very most of the next phase of arbitrage?
Louise Beaumont, Vector Associates Dr Louise Beaumont is a Principal at InformationIQ, and the MD of Vector Associates, a consultancy and interim company focusing on business development. She is also a columnist for Outsource online.
The origins of labour arbiTrage
The origins can be traced back to the 1980s when ADP and EDS started the outsourcing industry, and effectively dominated it, as there was no real traction beyond them until 1988, when IBM won a major Kodak contract. Then, in 1989 EDS won a landmark deal with Xerox – and this really was labour arbitrage. It was about delivering from Texas and overseas, rather than from New York. And about younger people delivering the IT, rather than those with 20+ years of tenure. But where are we now?
a wide range of currenT views
Views spanned the full spectrum from “arbitrage forever” to “arbitrage is dead and buried”, and everything in-between. Taking each in turn… The views in this article come from US-headquartered companies; HP and Accenture; an Indian-headquartered company; Wipro; a European company; Atos Origin; and also two sourcing advisors: Equaterra and TPI. Before we get into that particular argument, let’s have a swift look at the history leading up to today. Arbitrage for ever First I spoke with Mark Hodges, Chairman of Equaterra. His view is that this is not the end of arbitrage; “Labour arbitrage has always been part of the industry, and it will be a top-three lever going forward. The location is just moving. In the 1990s Dublin, Amsterdam,
hen I started talking to people about this article, I was pretty sure that there would be a consistent view: labour arbitrage was on the way out. What surprised me was that there was such a wide range of views. So I spread the net further, and talked to more people.
“Thou, O God, dost sell us all good things at the price of labour.” - Leonardo Da Vinci
Table of Contents for the Digital Edition of Outsource Issue 23
Outsource Issue 23
News & Comment
More Than Just A Headcount
Call Centre Technology
Cutting Through The Noise
All In The Genes?
It’s Time For Contact Centres To Get Socially Responsible
Right From The Start
All In The Game
Relationship Management Centres
A New Reckoning?
The Music of Outsourcing
Top Ten Tips
The Legal View
HfS: New outsource Partner
The Last Word
Outsource Issue 23