The Future of Outsourcing 2020 - 2030
It is hard to imagine now, but just 35 years ago when President Richard Nixon visited China, it was not producing much in terms of Manufacturing. It was a large agricultural country, and in pretty much a generation is has become the biggest contract manufacturing country in the world.
It was not until the late 1990-ties and early 2000, that outsourcing in the Tech Industry started to take shape. Most early outsourcing followed the same path as Manufacturers had done and looked for the lowest prices possible. It soon became clear that this wasn’t the best strategy.
Where manufacturers preferred mainly outsourcing to China, the tech industry had a clear preference for India and Eastern Europe. The level of tech talent was high and the communication seemed to be easy as most of these countries started to have issues with English. So, it seemed the best location.
The other reason for India clearly is that there are around 1.2 billion people living there, so a clear abundance of People. So clearly it would be easy to scale to 1000 people in a team at least that was the big theory.
However, where making shoes required little cross-border interaction, building technology required significant interaction and that is where issues starting to arise. Different cultures, different timezones, different internet speeds and lacking infrastructures were barriers that needed to be overcome.
Most of our customers, are coming from 3 main categories (1) they are outsourcing in the USA or Canada and find it hard to scale given the high price point (2) They are outsourcing in a distant country, but are experiencing the many problems that are described above and decide to look a little closer to home (3) They are looking for employees but because they are in competition with large corporations, they have difficulties attracting tech talent.
With that in mind, let’s look into the future. We believe we are strategically located for the North American market, as we are located in Colombia, which covers the same timezone. The market has shifted in the last 20 years as the internet is now optic fibre for the most part and many people in Colombia have picked up some degree of English.
We envision the same will happen to Africa. The continent that has seen the biggest transformation in the last 20-years. When watching news stories about the continent, you would believe that starvation, corruption and HIV are defining the continent, but a sprawling new ecosystem for Tech and Startups is changing the continent for the better.
We are also having an eye out for our European Partners for countries in Africa and we believe that it has some real potential. Rwanda, Kenya and other countries are investing in tech talent and given that the countries at least in the cities have adapted a good infrastructure in terms of internet.
It is pretty clear to imagine that with the current scarcity of tech talent in the US, Europe and elsewhere that more and more organizations are going to be forced to have part of their technology development, R&D and Marketing be done outside their borders. It is not that difficult to imagine that this pressure will make different organizations creative and that more Nearshore locations will pop up and even maybe it might advance the economies of some countries.
As I can clearly see in my adopted country of Colombia, the power of the local elite clearly gets diminished by the fact that many people now get the opportunity to work outside their own borders. English is the norm and even in lower class neighborhoods English language courses are sprawling up like Mushrooms. This is a trend that will make the world flatter and makes it harder for adversary regimes to thrive.
In the next decade, we expect that nearshore partnerships will be sprawling up as more and more as more organizations will see the benefits. In our article in 2018, titled “Nearshoring is Outsourcing at its best”, we layout the benefits of Nearshoring further.