How global sourcing is changing the shape of the business world.

by Glenn Davidson

During our discussions of keynote speakers for HRO World, I recommended that we ask Thomas Friedman, the author of The Lexus and the Olive Tree, about globalization in the 1990s, and a new book, The World Is Flat, about the sourcing revolution. Unfortunately, we couldnt afford to pay Friedman. Fortunately, I was willing to read his book, plagiarize as much of it as possible, and talk to the attendees of the HRO Awards dinner about it.


Anyone who picks up The World Is Flat will have a hard time putting it down. Thats because the world Friedman describesa world where global sourcing barriers have collapsed, time zones have disappeared, work days have extended to the horizon, and work has been transformed into pieces that can be constructed and deconstructed at willis a story weve all lived. This new flatness has defined the HRO industry and will affect our missions going forward.


Think back to two or three years ago and remember how you had to talk about HRO with potential customers. Back then, there was basically no research, no industry data, no understanding of best practices, and no accepted profession.


Today, employers throw around terms like HRO and strategic sourcing with a bravado we never dared to show. Give it time, and this language will become common in every boardroom in America. No new project will be proposed without considering the sourcing options.


Within the past year, offshoring switched from being an issue of concern to being an issue of imperative. Once the political heat of 2004 died down, customers saw that global sourcing wasnt just about labor costsit was about making a 24/7 business a reality. Offshoring provides access to skill sets and language capabilities not available in home markets. Coupled with the cost savings, these tools help global firms remain cost competitive on a global scale.


The reason why offshoring will eventually die down as a political issue is that, inevitably, the forces pushing jobs offshore will bring them back. The talents that have been unleashed in India, the Philippines, and China are in turn fueling ambition. Companies in these countries are not content being bit players, they want to be winners. And so, in this new flat world, the 24/7 economy will inevitably reach back home as these companies need to find footholds in our home market.


Its amazing to see how quickly customers have redefined providers. In the HRO early days, HRO was provider driven. Today, HRO is customer driven. When we began, there was little understanding among potential buyers of the HRO practice. Today, HRO education is a big business. And today, HRO customers speak differently than they did in our early daysnot jargon, but rather accents. Early on, the major HRO clientsBT, BP, and BAE Systems were all U.K.-based companies. However, American firms, in typical fashion, not only understood the market opportunity and embraced the concept, they actually claimed it was their idea! And to form, Asian companies are fast becoming an increasing important part of this mix. So too, global customers have awokenalmost at onceto the imperatives of the new flat world. In all these ways, customers have changed and theyre driving provider innovation.


The first wave of outsourcing customers came to us with simple imperatives. Today, were seeing end-to-end HRO take hold, under the one throat to choke principle. The new mantra of the outsourcing industry is its the data, stupid. Just as customer data revolutionized business 10 years ago, internal data has significantly altered the way enterprises analyze sourcing.


So where does that leave us? Friedman writes that the sourcing revolution underway is creating a national crisis that must be solved one person at a time. While American business has, for decades, had substantial natural advantages, we cannot be complacent that these advantages will hold up for longnot when work can move seamlessly to the lowest cost and the best talent. Friedman says that the dirty little secret no CEO wants to tell you is that companies are outsourcing not just to save on salary, they are doing it because they can often get better-skilled and more productive people than their American workers.


For the HRO industry, this is a major opportunity. HR has moved front and center in the global economy. The clarion call weve sounded for years may finally be heard. Now is the time for all of us to stop and ask ourselves: How are you going to respond   

Tags: Contributors, Multi-process HR, Sourcing

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