Outsourcing, the strategic choice to lean processes

The rise of the digital age has fundamentally changed the way companies create value. While industrial complexity has always gone hand in hand with supply chain complexity, the digital age has made it possible to truly globalize workforces. With work product now digital in nature, there is no freight-related costs and no delays between two workforces separated by a continent or more. Sharing thoughts and work now happens at the speed of light.

For instance, consider the biggest blockbuster of the last couple of years, “Avengers: Endgame” from 2019. The movie grossed $1.2 Billion in just its opening weekend. Among other reasons for its success was its spectacular visual effects. In all, the movie contained over 3,000 visual effect shots created by ten companies working in twenty-seven cities around the world, plus several more third-party vendors, working simultaneously to create a spectacular extravaganza on a tight timeline.

Figure 2: Modern Hollywood films are full of VFX shots produced by outsourcing vendors with offices all over the world, like this CGI image of the popular “Ironman” character from the multi-billion dollar Marvel franchise.

Digital outsourcing isn’t limited to high-budget Hollywood blockbusters. In fact, the global digital outsourcing industry is worth almost $100 billion a year, and growing. Classic outsourced activities used to be relatively “low-level” work, like customer service, data entry, and document transcribing- so-called “Business Process Outsourcing” or BPO. In recent years more knowledge-based work has also been successfully outsourced. This includes package artwork design, legal services, digital marketing, creative photo editing, Virtual Staging/CGI work, cybersecurity, etc. The primary reason why the model is so successful is it saves costs to principals in the form of salaries, healthcare costs, real estate costs, etc. It also allows companies to generate more revenue by effectively creating a round-the-clock workforce for activities that are not suitable for shift-based work, like creative design. Companies can also improve their bottom lines by delegating non-specialized work while focusing on core differentiating tasks.

A few more reasons why outsourcing is strategically important to create lean businesses are:
1) The universality of major software packages like Autodesk Maya, Adobe Photoshop, and After Effects; VRay, etc., is a major reason why work can be outsourced. Principals no longer have to spend time training their outsourcing team from scratch and can go straight to training their specific styles to vendors, meaning major cost reductions in outsourcing. Large outsourcing vendors can also independently develop a variety of styles for high-frequency applications like photo touch-ups for “off the shelf” work.

2) Lower costs, same/higher quality: Knowledge-based work is inherently boundary-less, so long as knowledge level is as required. On the other hand, cost of living is different around the world for a variety of reasons. Thus, outsourcing allows cost-effective, high-quality work to be done. In fact, for work with special cultural nuances, results can actually be better with local vendors who can use cultural familiarity to reflect desired aesthetics even better than some principals. Vendors who achieve this become valuable partners to their principals, and in concert, the partners can create outstanding work around the clock while lowering costs.

3) Sophisticated collaboration software and access to high-speed data connectivity: One of the biggest barriers to outsourcing knowledge-based, collaboration-heavy work used to be the elaborate setups required to replicate the ease of in-office meetings. With the Pandemic, teams around the world have adapted to the new reality. Collaboration software has come leaps and bounds as well, offering new features and single-click device connectivity (who would have thought “let’s zoom” would become universally synonymous with Video meetings?) Cheaper, more stable, ever faster mobile internet has also been crucial to the success of the remote collaboration, and with 5G around the corner, the future of dependable remote collaboration looks bright.

4) Work suitable to non-gender-specific roles- Digital work is inherently non-gender specific. It only needs the requisite degree of aesthetic and technical skill. As such, it is well suited to diverse workforces and inherently inclusive. For instance, over 50% of the graphic artists at Manipal Digital Systems are women from the local community who do high-quality work for clients around the globe, creating value for themselves and clients everywhere.

Conclusion
Distributed working is a new reality, and outsourcing is a major enabler of its success in the ongoing pursuit of ever more efficient supply chain management methods to create lean processes. Outsourcing creates more wealth for all stakeholders and allows businesses to invest in their innovation efforts, creating new jobs and continual advances such as the one that has already turned the digital age into one of the great epochs in human history.

Reference

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