Part 1 - Complicated Times
This blog has covered outsourcer issues on our India Business blog, though outsourcing is global in nature. This release is the beginning of a new series. Its focus is hunting talent.
Outsourcers are hunting for talent even as global spending patterns change, the availability of talent pools change, and competition sharpens.
Large enterprises have pursued international sourcing of talent in information technology, engineering, and business process outsourcing. Local (domestic) costs for talent vary at large enterprises for process work ranging from reconciling ERP computer application data integration and developing/upgrading information technology applications, to engineering and support work for large projects. Key factors in this pursuit have been the lower costs for talent (particularly in India), availability of talent, and willingness to work on sustaining work (like support).
Outsourcers are now facing challenges as global economic challenges collide with talent costs. Outsourcers and enterprises are seeing increased talent costs in, what were low cost markets (e.g. India or China). Local (domestic) inflation and higher wage expectations are driving costs up. Large possible customers are pressing for aggressive prices leading to lower margins for outsourcers being pressured on revenue and talent costs.
Rapid changes in developing technologies are also pressuring outsourcers and technology labs located in global pools of talent. European enterprises seeking lower talent costs and access to large volumes of talent have sought out global locations. India and China have seen growth in local employment of engineering and information technology staff for electric vehicle development, embedded software, and sustaining engineering.
Challenges come with developing technologies like artificial intelligence (AI), additive manufacturing, pharmaceutical production, and green energy. In these areas, global demand for growth in development, manufacturing, production, and support is creating a demand for talent skills and pools not always available in traditional outsourcing markets. The rapid changes in technology stress the capabilities and capacity of outsourcers to supply the right talent.
Changes in global pools of talent are also due to events. Competitive pools of talent see changes in availability affect Ukrainian talent (inside and outside the country), sanctions applied to various countries by others, economic preferencing (such as Made in America or Make in the UK), Brexit (and EU mobility), and local economic conditions (Argentina, Japan, Turkey, Canada). The effects of Covid-19 are also still felt. Outsourcing markets see disruptions in education, work experience, and local domestic choices.
Demographic changes in the G7 countries also impact talent pools. In the USA, EU, and Japan demographics are shifting talent availability. Over a roughly 10-year period (‘now’ is in the middle) many older talented workers are leaving the workforce and taking their experience with them. Demands come from the need to maintain (sustaining engineering) and enhance (continuing engineering) existing facilities (manufacturing), infrastructure (civil and physical), and technical (information technology). As older, more expensive, workers leave pressures to use less expensive (outsource) workers grow.
The challenges for outsourcers are not merely to survive and thrive in an era of hot competition and global change. Outsourcers must also cope with local domestic challenges in education, expectation, and demographics. The result of these pressures will be to heighten The Hunt For Talent.
You can read other pieces related to outsourcing at www.ekalore.com/india-business, or you can read our earlier piece "The Hunt for Talent" -https://www.ekalore.com/hunt-for-talent
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