Unmapped Territory | Article

Unmapped TerritoryOur world is moving so fast these days that those who proclaim that something can’t be done soon find they are outdistanced by those who are, indeed, doing it. Global companies have come to the same realization for success that was understood by Henry Bessemer, who years ago discovered a new method of producing steel. Afterward, he explained his success was due to an immense advantage he had over others dealing with the same problem. The advantage was that he did not let his mind be controlled by fixed ideas derived from longstanding practices. He ventured into unmapped territory.

In my role as editor, I have been amazed as I have watched over the years the growth of outsourcing on a worldwide level. Despite cultural differences, lack of infrastructure, difficult laws, and the economic troubles in many countries, outsourcing is booming everywhere — from Chile to South Africa, to Europe and Australia, to Japan and Korea. Nations that once were onlookers of this vital business strategy are now adopting it in every respect.

Just last month, I spoke in Australia to a group of executives who are very enthusiastic about employing outsourcing strategies in their companies; next month, I will be sharing information with a group in Holland. In early April, a delegation of twenty Japanese businessmen, headed by the Ministry of Trade, visited; they shared with me their eagerness to bring outsourcing to Japan and to have Japanese companies participate as outsourcing suppliers.

Their thirst for knowledge and advice on outsourcing coincides with what we find is the readership of the OutsourcingJournal. The executives who consult the OutsourcingJournal and its associated web sites are a veritable “Who’s Who” of every major corporation in the world — from the largest oil company, to specialties in Japan and Australia, to manufacturers and insurance companies in Europe.

New global partnerships are venturing into the outsourcing world’s unmapped territories; and, much like the Lewis and Clark expedition to explore and map the American West in the early 1800s, success depends on the right timing; the right commanders who share the same visions; enough resources; and help from guides who have previously set foot in the territory. We, at OutsourcingJournal, see major trends emerging in the global adoption of outsourcing; and, in this issue, we share information from those who have been exploring and establishing footholds in new outsourcing territories around the world.

Niche Markets

As a result of Lewis and Clark’s expedition to find the shortest and most convenient route from the Eastern United States to the Pacific Ocean, and to map that route, adventurous entrepreneurs traveled the mountainous route to the west and established entirely new types of businesses, as well as niche services to the new settlers.

Some of the principles of successful outsourcing models that have been developed in North America, Europe and Australia, are now being applied to new global markets. International companies are adopting outsourcing as the best solution for specialized needs; and, as a result, we see four unique worldwide niches developing for outsourcing suppliers.

Rick Roscitt, president and CEO of AT&T Solutions, and Werner Grab, CIO of Ciba Specialty Chemicals, explain in this issue the complexities of establishing worldwide networks. Building and managing sophisticated networks around the world is extremely important in today’s global communication practices and involves more than solving scale problems. This is quickly becoming a niche for outsourcing suppliers with the expertise to handle the special demands.

The category of human resources services and, in particular, benefits administration, is another outsourcing area that is developing into a niche field. We see global companies leveraging the reach of suppliers, such as PricewaterhouseCoopers, to provide a uniform and high-quality human resources vehicle that would, otherwise, be extremely difficult and expensive to provide. Back office accounting functions also fit well as an outsourcing niche. Likewise, desktop and desktop services benefit from global reach.

Journal Entries

One of the most valuable aspects of the expedition was Lewis’ journals, where he made daily notations of their discoveries in the new territory. He noted the soil and climate conditions, as well as newly discovered animals, birds and plants. Throughout the expedition, he sent reports back to President Jefferson, along with actual specimens of seeds and animals. These journal entries contained invaluable knowledge used in the later development of the territory.

Dennis McGuire, president and CEO of Technology Partners International, discusses in this issue the idiosyncrasies of some of the world’s regions, as well as advice in getting started in outsourcing in international territory.

Boom Beneficiary

As part of his compensation for the expedition, Lewis was appointed as governor of the Territory of Louisiana. He knew the wilderness better than any new settlers, had a high level of energy, was talented and was an effective leader. He first prospered from land speculation as boom towns sprang up throughout the territory. Significant growth in the territory caused him to see the wisdom and strategic benefits of establishing businesses there, and he formed a fur company and a newspaper.

Similarly, it is evident that executives around the world have seen the wisdom and strategic benefits of outsourcing. The booming success of international partnerships that are already established is now leading to the creation of domestic outsourcing companies in places like Japan, Australia and Europe.

Cap Gemini Sogeti (formed from a merger with Debis Systemhous, the spun-out IT department of Daimler Benz) has emerged as a strong force in Europe and is one example of this new trend of countries forming their own unique outsourcing companies. The strategic alliance of IBM and Korean Air involves creating a major Korean IT services company that will also be able to meet the needs of other Korean companies. Lend Lease and Telstra partnered with IBM to “Australianize” IBM’s offering. Another strong Australian partnership exists, with CBA Commonwealth Bank owning a significant share of EDS Australia. These native outsourcing companies are competing in mega deals around the world and, as their revenues and success increase, I believe we will see the current trend of creating these unique companies become the standard ideal pattern.

The Map

History reveals that the benefits of the maps drawn by Lewis and Clark justified all of the enormous expense of the expedition. In this and forthcoming issues, we, at OutsourcingJournal, are drawing the map to the major trends and movements that we see emerging in international outsourcing. The map will lead you to global marketplace territories that are more than competitive hot spots; they are untapped goldmines.

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