Outsourcing gets personal

Person-to-person offshoring (PPO) - this could really be the next hot thing in offshore outsourcing.

Why is it so important? Well think about how the outsourcing trend has developed. Large companies paying experts to help where they either don’t have the expertise in-house, or find that it is cheaper to pay someone else. The snag is that all those company-to-company relationships need contracts and time to oversee and manage. It’s no surprise that the much-discussed new wave of small to medium-sized enterprise (SME) outsourcing has never really grown.

But as a potential market, just consider the number of small companies that are out there. There were an estimated 4.3 million private-sector businesses in the UK at the start of 2004. This compares with an estimated four million comparable enterprises in the UK at the start of 2003. Almost all of these organisations (99.3 per cent) were small (less than 49 employees). Only 26,000 (0.6 per cent) were medium-sized (50 to 249 employees) and 6,000 (0.1 per cent) were large (250 or more employees).

So all the outsourcing action has generally been restricted to those 6,000 companies at the top. There has not been much action at all from the really small micro-companies and one-man bands. However, even small companies need some IT maintenance, a web site, some bespoke systems, and databases. The very small companies are actually more likely to want to explore the outsourcing option than the mid-sized, because they have a greater need. Owner-run companies don’t have any spare resource and the owner generally wants to run the business, not design a web site. And that approach is not because of any IT strategy plan, it’s through necessity.

The India-based research firm Evalueserve has just published some analysis of the possibilities for very small-scale outsourcing in the US. In particular the research focused only on the possibilities for person to person offshoring, because small companies generally want to work with small companies – a small company would not commission an IT giant to build its web site. At present there is no UK data, but I hope they run the same study here soon, because it would be really useful to see how the 99 per cent of UK companies that fall under the label ‘small’ might be able to use outsourcing.

The Evalueserve research and analysis shows that between April 2006 and March 2007, the revenue from this person-to-person offshoring sector was more than $250m and is likely to grow to over $2bn by 2015, representing a cumulative annual growth rate of approximately 26 per cent. Furthermore, because this set of consumers (the small business owners especially) has diverse requirements, the breadth of offshoring services offered is also likely to be fairly large. Expect every service under the sun to be on offer. Many of these offshoring trends are in the beginning of their life cycles and others only have a few early adopters so it is not clear that all of these services will, in fact, enjoy mass adoption in the long run.

The Evalueserve report concludes that: “The value proposition of receiving such services at a significantly lower cost and ‘just in time’ is clearly irresistible, and therefore the overall sector shows the promise of rapid growth.”

I’m watching PPO closely now and I’ve seen real examples of how this might work in the past few months. I think PPO is going to usurp the dreams of SME outsourcing.

Comments

[Mario Palavecino]

Mark, first of all I wanted to say that I found your article very interesting and it really showed me and my team the potential growth of person-to-person offshoring.
I’m the president of an offshore IT outsourcing company (www.nextcomm.com.ar) based in Argentina and we went through several analyses of the possibilities for very small-scale outsourcing in the US and Scandinavia, but we were not able to get solid information to realize the opportunity behind PPO until now.
Having analyzed your article and the Evalueserve reports we finally agreed in fueling our PPO initiatives.
I would like to know about the PPO examples you have been looking at during the past few months and share our field experiences in the near future.

I hope to hear from you soon.

Mario Palavecino
mpalavecino@nextcomm.com.ar

[Marten Pietres]

FROM:SIR MARTEN PIETRES
AJ_ANJLA LOAN AND FINACE HOUSE:
BROAD COVE PARTNER,INC.
132 NORTH STREET,HINGHAM,ACCRA,
GHANA.

FUND FOR INVESTMENT

ATTN:YOUR COOPERATION ABSOLUTELY NEEDED.

I wish to bring to your notices an investment proposal that requires your
assistance.I am SIR MARTEN PIETRES, the managing director of AJ_ANJLA loan
and finance house,ACCRA GHANA.

This is a business of $35 million US Dollars belonging to my company which
we deposited in a finance company here in Ghana .AJ_ANJLA loan house was
co-owed by me and a Briton who was the brain behind its establishment .My
colleague was a director in a UK oil giant BP. The collapse of AJ_ANJLA
that led to our depositing our money in a security Company started when my
associate MR TRACY KARL was accused of being involved in oil bunkering
[illegal oil lifting and bunkering] when investigation confirmed that he
has been sponsoring the business for more than 4years without the
company's awareness,he ran away. All effort made by my government to get
him through BP AND HIS embassy was in vain for no such name existed in
their record. That was when my government decided to take action against
AJ_ANJLA claiming that it was an avenue for bringing fund into the country
for illegal oil lifting. lot of other things happened though politically
motivated, that led to my being kept under security watch by the
government [house arrest].

I have decided to transfer this money to you country where I can re-invest
it in a more profiting business with your assistance. This is where will
need your assistance If you can assist me in receiving this money and
keeping it for me in trust of assist in investing it i will give you $8.5
million out of this total fund for your time and assistance.I have
budgeted $500,000 to cover every form of expenses you may incur during the
course of this transaction,MIND YOU THAT I DO NOT WANT YOUR MONEY. I have
every contact that will facilitate the transfer of this fund without risk
.What I just need is your acceptance to help in receiving this fund. I
will give you more details on this when you are to get back to with the
following details::

NAME:
CONTACT ADDRESS:
BANK DETAIL:
AGE:
SEX:
OCCUPATION:
PHONE #:

And please know that Everything is absolutely legal,that's why You have to
fill a contract WITH MY ATTORNEY! If you are interested in our
offer,please respond with the following ABOVE details in order for us to
reach you:

THANKS

SIR MARTEN PIETRES
AJ_ANJLA lOAN AND FINACE.

[payday advance]

It is happening on a high scale, especially in the tech world, lot of big companies out source from India, pakistan and other small nations.

[Jason Hights]

I just got a new website. Did the whole thing using TaskUs (www.Taskus.com
). I'm starting to believe in this personal
outsourcing thing.