The year is 1956. American Physicist William Shockley moved to Mountain View, California to look after his ailing mother who lived in Palo Alto. This move indirectly led to the emergence of what is now called the ‘Tech Capital’ of the world - Silicon Valley. Shockley was not just your run-of-the-mill physicist. He was the co-inventor of the transistor, arguably one of the greatest inventions of the 20th century. Once in California, he set up the Shockley Semiconductor Laboratory - which indirectly led to the creation of Intel. The rest, as they say, is history.
In the next 50 years, California saw tremendous growth in its electronic and technology sector with a lot of tech giants setting up shops in the valley - the likes of Google, Apple, Intel, Meta, and Adobe just to name a few. This also meant the US and the valley began to host most of the best minds in the world - the best coders, the best engineers, and the best data analysts: This was the place to be.
In the last 15 years, there has been a gradual shift in the concentration of talent, with the Asian and European hubs being built up. But the COVID-19 pandemic changed things up for the tech sector - with more and more companies having to switch to a ‘Work from home setup, companies began noticing the falling dependencies on where the best minds are working from, and WHO those minds are. Several firms have switched completely to remote work even after offices worldwide opened back up. With the pandemic also came financial crunches, cost-cutting, and downsizing. But this did not come with fewer projects or lesser stakes - the projects were still coming in, and the stakes were as high as before.
The pandemic, the cost-cuttings, and the potential of remote work all gave birth to a trend that is now gaining more and more traction: Outsourcing. While the concept of outsourcing has been around for some time now, the need for it now is the highest it has ever been. Amazon has announced that it would pause adding new corporate workers, while Lyft Inc. will eliminate 13% of staff or around 683 people. Digital payments firm Stripe has laid off 14% of its workforce recently. Even if not layoffs, firms are now pausing or slowing down new hirings - hinting at a weakening economy. Smaller startups are finding it ever-so-difficult to obtain funding and build the workforce.
Even amidst all of this, as key stakeholders, the founders are faced with the biggest bottleneck of them all: missed deadlines and unfinished projects. With the crunch in resources only increasing, they find it difficult to manage the projects that would be crucial for the firm’s existence in most cases. But there’s one aspect most of them forget - the great talent pool of the world.
Even though the word ‘outsourcing’ is being thrown around without care or context, from a business standpoint, this could turn out to be one of the most crucial keywords in the next 10 years. As mentioned earlier, the tech talents are now way more spread out and diversified than it was 15 years ago and the founders are starting to realize that, and the power of outsourcing. With countries like India, Japan, and Poland now rising with their incredible and easy-on-the-pocket tech talents, founders must pay heed to the signs and shift towards outsourcing.
With Big Tech laying off highly skilled people - there is now a talent gradient being formed worldwide, especially in the software sector. It’s the classic case of the law of supply and demand. There is demand for talented coders and technically skilled workers - while the supply is clearly there. But the fact of the matter is, most people aren’t making use of this long list of potential workers who are out of a job and are ready to work.
As a business owner or a founder - of an early-stage startup, you’d have had a lot of bottlenecks to go through to hire talented employees to get projects going on time. The search time, wage discussions, the back and forths, the onboarding period, and the training phase - this would add to the delay that is already costing you money and reputation.
Outsourcing would solve all of these for you - you can pick and choose employees with the specific skill set required for the projects, rather than train them from the ground up. The onboarding process would be way quicker and all of this would result in a better turnaround time for the projects under progress. To add to this, finding the right resources and delegating tasks becomes difficult and time-consuming if the organization solely relies on. In most cases, the recruiting team is not that big - and this will further add to the woes of the company.
Now, while it is true that there are multitudes of talented people out there, you would want an aspect of verification and check so that they are aligned with what you want and vice versa. If the corporation teams up with a software outsourcing firm, it can quickly expand the workforce under a sensible engagement model. Additionally, believe that outsourcing tech talent might help with accurately managing work in a hectic atmosphere.
(Source: BusinessWire)
Just to give you some context:
- Software Development Outsourcing to grow up to 70% by 2023 (Source)
- The global outsourcing market in 2019 was worth 92.5 US billion dollars, according to Statista. (Source) On top of this, the size of the global IT Outsourcing (ITO) market was valued at $556.67 billion in 2020. (Source)
- Only 22% of the global market was reportedly occupied by IT or software outsourcing in 2020, according to Krusche Company. And by 2025, its proportion will rise to 25%. As a result, the outsourcing sector will continue to grow in 2023 and generate a sizable profit and market value. (Source)
The supply-demand issue when it comes to software roles
Global outsourcing allows companies to cut multiple costs and free up a larger talent pool. Companies moving remotely and embracing outsourcing will certainly gain an edge in the coming years. Now you can focus on your core business needs instead of managing an in-house software development team.
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