The stakeholders in outsourcing never have the same motivations, but current pressure on the G7 based enterprises that hire them, workers, government, and outsourcer financials are moving in different directions. Outsourcers are looking for greater margins, workers are seeking greater compensation, and governments are seeking to maintain or increase domestic employment levels.
Can everyone be satisfied?
This release focuses on the talent roles seen as the G7 countries contemplate recession and “on-sharing” as major discussion topics.
Dynamic India sees key global enterprises bringing Indian talent, G7-country needs, and accumulated domain knowledge, know-how, and reputations together. The India-based outsourcing enterprises are both a key earner of foreign currency and key employers as a group and industry. Dynamic India has a path thru key enterprises to earn a continuing status as a major contributor of talent to enterprise needs on a global scale.
The reputation of Indian outsourcers to provide talent, deliver projects to needs, and to economically provide business process outsourcing, is plain to global customers and prospects. The financial reports of key global enterprises in India talk of additional projects signed, continuing employment for Indian talent, and increasing capabilities & capacities to tackle global enterprises’ needs. In each of these areas, the decisions facing outsourcers are now common with their global outsource competitors.
EkaLore has talked about the concerns and dilemmas of outsourcing providers before: www.ekalore.com/india-business
The outsourcers are now faced with immediate decisions on talent. In any outsourcing situation, talent is always an issue since the limited pool of top talent is never aligned with demands. The talent demands are for the most productive, most knowledgeable, and most capable (know-how). The business demands are for delivering economically (with profits), effectively (gaining the most domain knowledge and know-how for workers as increasing knowledge and skills development), and at the least risk.
The current demand areas are split between highly effective (and skilled) high-end talent (BAD Projects, enterprise scale, cloud migration, etc.) and core talent (business process workers, customer services, and support roles). Outsourcers are faced with keeping the best workers (as customer enterprises respond to global challenging times) and reassigning others (as technical talent needs change).
Recent quarterly reports have shown India’s outsourcers to be under margin pressures as customers drive hard bargains and the costs of maintaining talent pools increase. Expectations of the two groups are divergent – customers want even better talent and delivery for low costs and talent expects substantial increases in compensation as inflation bites. Outsourcing management has to control the past (delivering contracted projects within budgets), the present (aligning costs and resources on and off project), and future (delivering future projects with margins). The present pressures and conflicts for control affect the management decisions to meet multiple stakeholders.
The Government of India sees the continued global enterprise business as critical to India’s future. Until India can make the transition, the balance of stakeholders will be critical to success. They are not alone in needing to balance stakeholder needs as the economy develops. China is now in the throes of (moving from a global export driven business to a domestic self-sustaining economy). The interests of the Government in maintaining levels of employment (particularly in geographies hard hit by Covid-19 and domestic factors) and continuing to expand the use of Indian educational human capital are in conflict with larger margins for the outsourcing enterprises.
The management decisions for outsourcers need to:
1) Maintain the pools of talent (onboarding and training are considerably more expensive than maintaining some level “off project”)
2) Accept different margins (some “top line” projects for revenue with lower margins) entering a likely recessionary period (with contractual and other methods against inflation)
3) Invest to build capital assets (people, domain knowledge, innovate technology rather than acquire abroad, pools of know-how)
These decisions are “not obvious” in requiring a level of spend and management attention in conflict with the demands of some stakeholders. To build for more options in the middle term (during and after a potential recession) outsource enterprises must make good decisions now. Good investment decisions will provide the most options in an unclear longer term.
EkaLore regularly publishes our thoughts about the roles of outsourcers and particularly roles for India’s outsourcers looking for business in the G7 countries. You can find our other posts related to Dynamic India at www.ekalore.com/india-business
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