It’s time for YOUR vote… should we drop the word “outsourcing”?

The debate’s been raging for years, since we first broached this topic over four years ago, where the common consensus was pretty much “we’re stuck with it, so might as well live with it”.

However, while the outsourcing industry has (largely) matured, with many new clients focused on achieving value that isn’t merely derived via cost-savings from lower cost labor, the political rhetoric has stood still, with the vast populous still associating the “O” word with shipping jobs abroad.

So… it’s time for YOU to have your say, whether you buy, sell, advise, analyze or influence IT or business services.

Please spend five minutes of your time adding your own viewpoint on whether or not the industry known as “outsourcing” should reinvent itself:

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29 Comments

  1. Victor Kohanski
    Posted July 27, 2012 at 5:35 pm | Permalink

    While the IAOP did well in trying to establish an accepted definition, if you break it down, it’s really just “sourcing” something from the “out”-side. It was a catchy phrase associated with business processes sent to India. Yes, it should be dropped. It’s not as catchy, but “Business and Consulting Services” is really the industry into which it fits.

  2. Posted July 27, 2012 at 10:10 pm | Permalink

    I don’t think it will be possible to remove OUTSOURCING from the vocabulary, but I do think that the industry needs to pull together an awareness campaign that aims to correct some of the misunderstandings that are making a rational discussion about OUTSOURCING, OFFSHORING, INSOURCING, GLOBAL SERVICES and all the other difficult to define terms.

    While India has NASSCOM representing the Indian outsourcing industry, there is no organization in the United States or, for that matter, elsewhere, that represents the interests of companies that are global in nature and perform work in multiple countries in multiple forms. These companies can be users of third party services, providers of those services, or both. They can have outsourced relationships, captive operations, or hybrids. They have shared interests and their activities are very misunderstood as the political campaigns generally disregard the basic realities of business in the 21st Century, use terminology which is deliberately misleading and inflammatory, and in many cases just plain wrong.

    As there is no organization which represents “outsourcing/offshoring/global services” in ways that aim to educate the political world (Congress), the Media, and the general public. Almost every other industry in the world has recognized the value of joint awareness building, promotion, public relations, and lobbying. But this industry has never come together to mount a campaign.

    Perhaps it is time.

  3. Posted July 27, 2012 at 10:14 pm | Permalink

    I don’t think it will be possible to remove OUTSOURCING from the vocabulary, but I do think that the industry needs to pull together an awareness campaign that aims to correct some of the misunderstandings that are making a rational discussion about OUTSOURCING, OFFSHORING, INSOURCING, GLOBAL SERVICES and all the other difficult to define terms impossible to achieve.

    While India has NASSCOM representing the Indian outsourcing industry, there is no organization in the United States or, for that matter, elsewhere, that represents the interests of companies that are global in nature and perform work in multiple countries in multiple forms. These companies can be users of third party services, providers of those services, or both. They can have outsourced relationships, captive operations, or hybrids. They have shared interests and their activities are very misunderstood as the political campaigns generally disregard the basic realities of business in the 21st Century, use terminology which is deliberately misleading and inflammatory, and in many cases just plain wrong.

    As there is no organization which represents “outsourcing/offshoring/global services” in ways that aim to educate the political world (Congress), the Media, and the general public. Almost every other industry in the world has recognized the value of joint awareness building, promotion, public relations, and lobbying. But this industry has never come together to mount a campaign. Because there is no organized resistance, the industry has become a punching bag for politicians and fodder for the media.

    Perhaps it is time to work to reverse that situation rather than attempt to bury a term which has become too big to explain. Yes it would be nice to retire the term “Outsourcing”, but it probably can’t be done. Instead, why not try to influence the discussion which distorts the realities of what is going on.

  4. Posted July 28, 2012 at 1:40 am | Permalink

    Just completed the linked survey. The real question is why has the industry permitted their global services to be the post child for all the employment ills of buyer countries? Real truth commences with automation, efficiency, labor pressures, regulation, investor demands and excess profit taking/capitalization exploitation that has forced companies into a situation whereby their options are limited.

  5. Posted July 29, 2012 at 8:09 am | Permalink

    The word outsourcing is not negative yet the hurt and misunderstandings that jobs going out of their company is what we have to live with when we continue shining a light on that term.
    My thought is that you change the culture through a positive culture and a positive terminology that expresses that new vibrant trend. Examples: “Center of Excellence”, “Partnering explosion” etc. you get the idea. Culture is always a difficult thing to change but once done can be extremely vibrant and postive from top down to down up in the organization.

  6. Ramu Ramalingam
    Posted July 29, 2012 at 1:57 pm | Permalink

    No doubt, Outsourcing has always had a negative connotation all along. In reality, it is driven by market forces for value maximization. Therefore, the I believe it is time to drop the name outsourcing and come up with something that really describes what the outsourcing does to the client companies rather than just describe the end activity. It is peculiar when companies outsource services to other companies within the same markets are seldom called an outsourced activity, right? Perhaps something like Value Sourcing would be appropriate!

  7. Posted July 29, 2012 at 4:56 pm | Permalink

    Pfft.. I dont think changing terminology is going to change the views people have of the industry. Especially if it’s some random phrase with the words transformation and value in them. Want to make people feel better about the industry? Do something beneficial for them. And no, unfortunately, telling them that the fact they lost their jobs is actually good for them because the companies they used to work for are now more profitable, does not count.

  8. Sundar Ramanathan
    Posted July 29, 2012 at 5:48 pm | Permalink

    The Labor arbitrage process of Sourcing manufacturing and IT as well as some business processes went outside the developed nations to emerging economies. The Global context and nature of business demands effectiveness and efficiency. If either if these are affected apart from the economic and political weather then Soucing Stratagies would change and shift. As this phenomena has been repeated many times over both from domestic as well as international perspective, the idea of change yo Sourcing strategies cannot change due to current interpretations and market forces. The yin n yan effect is also reflected with some enterprises getting to In Source jobs .. However the quantity of jobs have shrunk while expected quality is on the rise.. We are getting to be a smarter Gen as global citizens are prospering..

  9. Posted July 29, 2012 at 9:19 pm | Permalink

    One of the reasons outsourcing has such a negative connotation is that it is associated with the loss of control of a business function. We need to change the perception of this industry by focusing on what an organization gains by working with a business process, applications or IT infrastructure provider. It’s time to take the ‘out’ of outsourcing.

  10. Ashu Tandon
    Posted July 29, 2012 at 10:18 pm | Permalink

    Every industry needs to reinvent itself every few years in some shape or fashion to remain relevant to its customers – outsourcing is no different

  11. Posted July 29, 2012 at 11:11 pm | Permalink

    The negative image of the word Outsourcing is largely due to the fact that over a period of past 10 years of so, Outsourcing has become synonymous with offshoring or shipping jobs out of the country. As long as that continues and people are uncomfortable about it, any term that you replace outsourcing with, is likely to evoke the same feelings.

    What people are choosing to ignore is the value proposition of outsourcing has matured much beyond labor arbitrage. However, the industry is unable to shake this stigma and it has become an easy target to take the blame for many things. We can choose a term that we like and agree – the question is whether the populous will accept that?

    Changing to a different name may help in short run or it may help people associated with this industry to avoid being associated with negative ‘O’ word. However, so long as people associate this industry with replacing people performing same or similar jobs, nothing much will change

  12. Thomas George
    Posted July 30, 2012 at 12:32 am | Permalink

    If you are not in-sourcing services to cater to the various BUs within the organization then you are just out-sourcing. That makes outsourcing relevant as it has been.

  13. Sandeep Arora
    Posted July 30, 2012 at 1:54 am | Permalink

    I do not think the changing the name is going to make a difference. It’s one of the sourcing decision – In house or Out side.

  14. Jozef Sobolewski
    Posted July 30, 2012 at 4:52 am | Permalink

    First. You are a little USA-centric. Whole world use this world without this ‘negative’ connotation. Second. Using other word to describe something doesn’t change what is behind. It is like in Orwell books. Last by last, outsourcing was born in IT industry in 60ties, not in 1989.

  15. Paul Singer
    Posted July 30, 2012 at 7:54 am | Permalink

    How about “Business Process Delivery Services”?

    Other than the fact that it sounds like a sexually transmitted disease, it captures the essence of what we do; off-shore, near-shore and off-shore.

    This is a worthy conversation at a time when the industry is going through a lot of change.

  16. Posted July 30, 2012 at 8:08 am | Permalink

    It’s curious that there’s a lot of ‘outsourcing’ going on that manages to avoid the term altogether – marketing agencies being a great example. (I guess it’s no coincidence that it’s marketing people that do it so well!). However, I don’t think we can move away from the term altogether – it is what it is. This makes me think – why do we use the ‘outsourcing’ term in first place? Is it used to easily explain to folk what we do? Or is it used to be part of the club (i.e. all our competitors do it, so we need to as well)?

    I think the problem is that there are so many variants of ‘outsourcing’ today that one term is no longer enough. It’s too generic. And unfortunately, unless they are told otherwise, people too frequently assume you mean an off-shoring/ labor arbitrage model when you say ‘outsourcing’.

    I think what is needed is a classification of the different types of outsourcing, that the industry gets behind. And I mean something more sophisticated than the affectionate terms ‘mess for less’ or ‘invest to save’. Come of HfS – help us out here!

  17. Phil Fersht
    Posted July 30, 2012 at 9:21 am | Permalink

    @Jozef – the issue is global, not confined to the USA – read this excellent piece in the Financial Times. As Ashu points out, industries evolve over time, and “outsourcing” is no different. Do we still call Internet services “eBusiness”, or HR “Personnel”?

    PF

  18. Matt Chambers
    Posted July 30, 2012 at 10:21 am | Permalink

    Negative connotations surrounding “outsourcing” derive from several factors In the US:

    * outsourcing is associated with offshoring and consequent job loss onshore
    * inconsistent performance and outcomes of outsourcing engagements
    * politicization of the word “outsourcing” to be a negative brand

    Changing language is unlikely to positively alter perception and runs the risk of fueling mistrust (e.g. cigarettes are now called “health sticks”)

  19. Posted July 30, 2012 at 10:34 am | Permalink

    Over the last decade, I’ve done my own PR within the organizations I’ve worked to use terms such as global sourcing and external partners/vendors. I don’t do it for smoke and mirrors, but rather I think it better explains the perspective you must take in leveraging a global world with a global supply chain — whether that be products or people. I’ve also focused that ‘sourcing’ is finding the right balance between internal and external resources. It can’t be one or the other. They must live harmoniously. But using these terms, regardless of what others use, helps spread the spirit of what we’re trying to achieve. Easier for me to say since the external sourcing we’ve leveraged has largely been in expanding services with little existing employee impact.

  20. Posted July 30, 2012 at 3:47 pm | Permalink

    Dang,

    We should keep the word and re-double our efforts to explain and educate on what outsourcing is, the various flavors, the synergy and value that can achieved. We have met the enemy, and it is us!

    Regards,
    Mike

  21. Ved Vyas
    Posted August 1, 2012 at 1:46 am | Permalink

    We are told umpteen times that don’t buy a book for its cover but people do buy a book for its cover. Thats the reason why product companeis spend so much time and money on packaging their stuff.
    Different groups i.e. government, business, employee etc have already formed perception about the word ‘outsourcing’ which is neither consitent not reflects reality. BPO industry in India has tried different names i.e. KPO for high-end services, LPO for legal works with mixed success to overcome the perception attached to BPO industry in employees mind with mixed success.
    While changing the name to something neutral ‘IT services’ or ‘Business Services’ is required to overcome negative perception around ‘outsourcing’ even more important is to educate all the stakeholders about industry and what is means for them

  22. Posted August 7, 2012 at 6:33 am | Permalink

    Mike Dagas’ response, short but sweet as it is, hits the nail on the head for me.

    A new name by any flavour is a new name. It feels like the least difficult response to a continuing emerging crisis for our industry, further exacerbated here in the UK by the mix in the public eye of ‘outsourcing’ and ‘privatisation’.

    An ex-PM of ours once said that he could sum up his manifesto in three words: Education, education, education. The problem for us as an industry is who is leading the charge to push our manifesto and to help educate business leaders.

    Great people work in outsourcing doing some fantastic things. This isn’t the time to hide their light under a bushell.

  23. Posted August 7, 2012 at 9:13 am | Permalink

    Outsourcing is what it is. Changing its name will not change the simple fact processes are taken from the client and managed by providers to allow the client to focus on more value-add activities. What it will continue to come down to is how providers choose to differentiate within the industry—low-cost, analytical insights, etc.

  24. Posted August 7, 2012 at 9:28 am | Permalink

    Good Analysis..!!

  25. Dhananjay
    Posted August 8, 2012 at 2:06 am | Permalink

    I suggest renaming “Business Process Outsourcing” to “Business Process Transformation” as it accurately reflects how this innovative service model is “transforming” businesses globally

  26. Posted August 20, 2012 at 8:41 am | Permalink

    Using third parties to deliver non-core components of one’s business is as old as the hills, and highly accepted as business strategy. Outsourcing is somewhat hoist by its own petard as it discarded this reputable image during the growth of sourcing low-cost economy labour in favour of a more ‘sexy’ persona. The portrayed image of outsourcing was of a business miracle, rather than the logical extension of an age old practice, and as such it was always going to fall short.

    As an industry we must share the blame for the reputation of outsourcing and the bad name. Rapid growth in a particular business sector or technology always carries with it the risk of gold-rush fever. The various graphs and studies on this site bear witness to the fact that there have been some very ill-advised outsourcing deals done, in many cases to reap the promised cost-reductions that have been the outsourcing industry’s USP for the past 20 years. It is regrettable that the patchy delivery of outsourcing in many cases becomes evident at the same time as an economic downturn encourages politicians to make capital from the sector, but to do so would have been twice as challenging had outsourcing maintained a sparkling record. As an industry we should have said “this isn’t for you at the moment” more often.

    Changing the name of outsourcing will only change perceptions until the first business case, PDD or sourcing strategy is beamed onto the screen. After that we had better have a smarter message. That message needs to come from us – the industry leaders. The outsourcing industry needs steering to less cynical, and more cooperative waters.

  27. Posted August 29, 2012 at 9:17 am | Permalink

    Outsourcing, as a business tool, will always exist, it’s just that it’s matured from being something people did as a stand-alone project (“we are doing outsourcing”), to simply being part of a wider business strategy and/or transformation program (“we are transforming the business, and outsourcing is part of the solution”). It’s not exactly business-as-usual yet, but it’s getting there.

  28. subra
    Posted September 5, 2012 at 3:07 am | Permalink

    Outsourcing still sends shivers down one’s spine albeit for the wrong reasons. While we are all looking at it from a business perspective, i would urge everyone to look at it from other ancillary units. The power brokers, the logisticians, the hospitality sector etc. In a lot of conversations that i have with various people across different industries, the term outsourcing gets flogged to death. There are a lot of negative connotations that still reside with this term. People are now hesitant to embrace an outsourcing worker be in IT or ITES sector

    Strangely, if one were to look back in time, outsourcing was there even during the industrialization era. All the ancillary units of manufacturing companies are but outsourcers. We term them differently , but they still provide finished goods (tangible) to big companies. Take the example of any automobile firm and you will see that a lot of the parts come from outsourced units. The modalities of business and relationships still remain the same in all of these units as well as outsourcing units. So why do we want to call the IT/ITES firms as outsourcing firms or the entire process itself as outsourcing

    One might argue that a name change will not lead to change in attitude of people. And that is the point one should look at. It might take double the time and effort to work on the term Outsourcing while it might definitely take a lesser time with a different term altogether. Its like a product at the end of the day. There are stories of great products with poor brand names which got rebranded and became a roaring success. Outsourcing is not different

    I guess it is time to change the word outsourcing and give it a more meaningful and dignified term

  29. Lucky Sharma
    Posted April 27, 2013 at 10:12 am | Permalink

    I have read very thoughtful comments in the thread mentioned above. I would want to say that we need to educate the world why large conglomerates are Outsourcing their business to different companies in other countries like India.

    I agree that outsourcing demeans the entire process. I believe the new name should be “STRATEGIC PARTNER OF EXCELLENCE”.
    Outsourcing should be portrayed as a strategic partnership between the two, the one which is outsourcing and the second which is providing service.

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