Outsourcing vs Productivity

I have always thought this talk about outsourcing every job in the country to be a bit ridiculous, while at the same time I have also found corporate America to be a bit short-sighted in its rush for cheaper labor. It is not about outsourcing, it is about productivity. The best companies realize that. From that silly pink newspaper.

Recent research from the consultants McKinsey suggests this may be the case. The research points to a shift away from eliminating jobs, through downsizing or outsourcing, to improving employee productivity.

"For many companies today," says James Manyika, senior partner in McKinsey's technology practice in San Francisco, "and for most companies soon, the biggest pay-off in productivity im-provement will come from making their most talented employees even more talented, and not from automating and outsourcing clerical or production jobs."

Could this be the beginning of the end of outsourcing? Mr Manyika feels businesses definitely should be starting to look at life beyond outsourcing. "Some companies are already at the limits of what they can outsource, given current technology and current costs. Manufacturing has been outsourced. Call centres and other transactional work has been outsourced. Most of the employees that remain are now doing complex work in areas such as sales, research and development and de-sign," he says.