For as long as humans have been organising in groups, we’ve been outsourcing to some degree. When working in family groups was the norm, outsourcing was about teaming up with other families to create larger communities or tribes. As these communities expanded so did their outsourcing reach, teaming up with people further away. Outsourcing from greater distances increased in step with advancements in technology and transportation. In each case, people found they could gain much more together than on their own.

Of course, the term “outsourcing” and all of the connotations assigned to it, is often tied to foreign contracting or offshoring of jobs, from the country of origin. Back in the past, outsourcing took the form of hiring in less expensive labour markets, purely for a cost benefits. It was simply labour arbitrage. Of course, this still happens in many industries and geographic markets – perhaps most frequently in manufacturing, administration and customer support services. But the pandemic and subsequent societal acceptance of remote work, at least to a certain level, have ushered in a new wave and, dare I say, a new type of outsourcing altogether. This new outsourcing is less about cost and more about solving talent gaps. Similar to our earlier days of working within family[1]group communities, our need for talent exceeds what is available within our local communities. So remote working is enabling talent sourcing beyond a 30-mile radius of the office and the potential for hiring top talent on a truly global scale.

If we consider the cybersecurity sector as just one example, according to CyberSeek, there are just over one million people employed in the U.S. in the country’s cybersecurity industry, but there are over 700,000 additional unfilled positions. That equates to over 30 percent of roles unfilled. If we broaden the picture – at this juncture in our economy and even in recession-era economics – there are simply more unfilled roles than available local talent. Consequently, if we are to continue connecting talent with opportunity at the massive scale that is needed, we must look globally. The potential is obvious, where in the past we had been limited by our access to other groups, with the advancements in technology – and the evolution of how we now work – the aperture from which we recruit talent continues to expand, from the original family unit, all the way into our global community. In short, talent doesn’t have a postcode. But despite access to a greater talent pool than ever before, the stigma around outsourcing lingers. In the past, concerns around the ethics of working in lower-cost countries, delivering lower-quality products, managing disparate time zones and sending jobs overseas, produced negative energy around utilising global talent. Many of these concerns are understandable, but if outsourcing is approached with the right intentions and a strong commitment to accountability, these issues can be managed and can result in positives that far outweigh the challenges.

At present, I think the main barrier for companies to engage the global workforce is the idea that those who are working outside of the office are less productive. There is a sentiment that if you can’t physically see someone, they are somehow less accountable and more likely to take advantage of the company’s “generosity” in allowing remote work. Though the data on productivity while working from home is mixed, the fact is that those who are unproductive away from the office are likely the same people who are unproductive in the office. Looking more broadly, if the team as a whole isn’t performing as well as expected, there are of course ways and means to manage and incentivise them, regardless of location. We all imagine tech firms to be on the leading curve of this new era of work, but ironically it is one of the most-guilty industries of conventional resource thinking, particularly in the United States. In Silicon Valley, there has been this general belief that someone had to live within a few zip codes in the Bay Area to be an effective software engineer, which has led to a shrinking local talent pool, an extreme increase in the cost of labour – and associated cost of living – and, you guessed it, the need to outsource. Of course, we know talent isn’t confined to Silicon Valley – skilled people live everywhere – so, for an organisation wanting to hire the best people to accomplish work, the world is literally their oyster.

But of course, not all outsourcing is created equal and at present, there are three main options for engaging international talent. Project-based outsourcing: This first option is outsourcing a project of limited scope or duration, to a contractor or company. This is a fairly common solution for creative projects such as; marketing assets, website building or services such as payroll or customer support. There are many benefits to this method, particularly around compliance and gaining a skill set that the organisation may not otherwise possess. But the strong downside is a lack of quality control, because the outsourced person is not being managed directly, decisions about who is hired or indeed fired are decisions usually made extraneously, by the third-party outsourcing party. This can be frustrating on the discovery that an outsourced person in place may not always be the best fit and a real risk in this arrangement is not being able to take quick action. The second option is for a businesses to create their own international entity, as this method maintains full control over hiring and managing an international team. In many cases, this makes the most sense when setting up in a new location where a business intends to remain and operate from in the long-term. On the other hand, committing to a specific region, country, headcount and more permanent management of an additional location takes significant planning, strategy, capital and, above all, time.

Added to the initial setup, the ongoing management of international employees requires adherence to a new set of regulations, compliance requirements and reporting structures, that may be entirely different from the country in which the headquarters are located. Of course, all of these tasks take up a significant amount of managerial time for non-growth-related activity. Turning to the third option, this is to partner with a global employer of record or EoR for short. This option enables rapid scale with very little managerial or financial overhead. This setup utilises local experts on the ground, which is often the most risk-averse way of directly engaging the employees required, while maintaining brand and quality. This option means the process of engaging with international talent looks and feels just like hiring talent in a home country, without the legal, HR and compliance-related issues. Meanwhile, the benefits of hiring and managing employees virtually has no downsides. So, what is the future of outsourcing? It has of course evolved and will only continue to do so. With this advancement, the existing barriers to outsourcing and any remaining stigma associated with it will lessen and, with fewer barriers, the future affords us more opportunities. With this new version of global collaboration, solutions are guided by the need to enable employers to hire great talent wherever they may reside, with minimal operational friction. Whether employers outsource projects to use another company’s skill set, employ contractors short-term, hire full-time employees through EoR services, or establish their own entities, it is clear global talent is part of our future talent solutions. This is Outsourcing 2.0, empowering organisations and liberating the global workforce.

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