12. Outsourcing 2.0: Knowledge work as a service
In this edition of No Office Required, we dive into how remote work will lead to knowledge work as a service. A bigger and better version of outsourcing that disrupted the economy of many developing c
First of all, why does outsourcing exist? Businesses always optimise for profit. In hiring, it’s low-cost, high-quality talent. If your job can be done from anywhere in America, it can be done in India, Nigeria or the Philippines. Covid proved remote work is efficient and scalable.
A remote team doesn’t have to hire in 100 countries - sure, it gives your internet bragging right. But there is no business reason to do it if you can easily find top talents in a handful. Businesses naturally choose the least path to resistance in solving their problems. If you care about good impact, there is no better way than hiring directly from developing countries.
Outsourcing is nothing new.
A few decades ago, India became the global call centre. A big chunk of Indian talent lacked employability, becoming the outsourcing centre of non-creative jobs. What started as call centre jobs also expanded into software engineering because of the rise in technology graduates. These companies are also notorious for low salaries and toxic work cultures.
Most of these IT services are also associated with quantity than quality.
Traditionally, the employer held a lot of power over employees. And on an average Indian graduates lacked employability. So somehow, India became associated as a back office for some cheap coders and on-call supports.
Outsourcing 2.0
Remote work can easily lead to outsourcing 2.0. It will look drastically different from the first version of call-centre outsourcing. How will it be different this time?
A few factors are influencing this.
With the advent of the internet, more access to information, better learning, and an exploding startup scene, the quality of talent is as good as, if not better, than that available in the tech hubs.
Many startups and employees in India have seen everything from the seed stage to IPO. It’s not just a place for outsourced work but to find quality talent. The same is true for other hubs like Nigeria or other APAC countries.
SaaS Startups like Freshworks and Zoho built a global product almost entirely with an Indian team. Finding talent in India need not be limited to just Engineers. There’s a lot more.
Andela, a Nigerian company that started in 2014 has already been providing engineering as a service. The Nigerian startup ecosystem has many fast-growing startups, improving the quality of the talent pool available.
Knowledge work as a service
Many typical roles in a startup can be done from anywhere in the world. With the pandemic driving the adoption of remote work at scale, there is nothing stopping companies from hiring people outside their HQs. That is not restricted to just Engineers. Remember, most businesses always optimise for profit.
There is an excellent opportunity for new-generation companies to aggregate a variety of talent and provide knowledge work as a service. The compensation they receive can still be as reasonable or higher than a top startup locally, with the flexibility of remote work.
Outsourcing 2.0 has several implications in the long term. The normalisation of salary ranges is probably the biggest one. The overblown salaries of tech hubs like the Bay Area will take a hit.
Contrary to popular belief that remote teams will be spread across the globe, there can easily be knowledge hubs dedicated to a larger tech hub. Of course, people will still be able to stay location-independent - but companies need not look for talent in 100 countries. Just a handful will do.
Some interesting links:
Portugal announced their new visa for remote workers: