August 30, 2018
The Source Superstore – The World’s First Outsourcing Superstore
The Source Superstore White Paper: Executive Summary
- [1/7] Outsourcing’s past and future: Outsourcing first started 25 years ago, and has exploded since then. Enabled by advancing technology, the industry now services almost every big corporation. However, the growth of outsourcing has slowed in recent years, which has sent shockwaves through the industry leaders. The future of outsourcing is in the SME market, which most traditional outsourcing suppliers overlook or disregard. However, the SME market has the capacity to be 10x-100x bigger than the big corporate market - it should not be disregarded.
- [2/7] Growth of outsourcing is unstoppable: The workplace and the essence of work is all changing - and fast. Co-working spaces, and remote and flexible conditions mean that standard employment no longer applies. Advancing technology, and automation and AI, further enhance employment flexibility and opportunities. Outsourcing needs to keep up with modern trends, and simply the way that people learn about and engage with outsourcing. Currently it is characterised by long and complex sales cycles - which dos not meet market requirement. Outsourcing is a win-win, which will help bring prosperity to all.
- [3/7] You can’t afford not to outsource: Outsourcing isn't just about cost saving, its about out-strategising and out-competing your competitors as a result of enhanced access to abundant human resources. Outsourcing is fundamentally different to the currently popularised freelancing (Freelancer, Upwork). Outsourcing will become an 'essential efficiency' within business generally.
- [4/7] Marketplaces and aggregators: Online marketplaces have revolutionised commerce. There are now online aggregators and marketplaces for almost every B2C and B2B sector possible. Until now, there have been no outsourcing marketplaces, and this has really inhibited the proliferation of the sector. Outsourcing is a complex and ongoing transaction, and so it isn't always easy to create a marketplace that serves these needs. Outsource Accelerator has launched Source Superstore, which provides a simplified outsourcing marketplace for B2B consumers.
- [5/7] Productised outsourcing services: Productised services represent the repackaging of standard services into a simpler, more contained 'package'. Productised services allow for a previously ambiguous service to become 'a distinct service, for a distinct price, with a distinct beginning and end period. This makes it easier for consumers engage with the products, which s better for everyone. This section explores the origin of productised services, and how it can benefit everyone in outsourcing.
- [6/7] World’s widest range of outsourcing products: This section outlines the benefits of the Source Superstore. Both the consumers and suppliers benefit from this more structured, more transparent, and safer marketplace.
- [7/7] Biggest range, best prices: Some of the benefits of the Superstore are the incredible prices, wide range, best bargains, and even some cash back offers.
The Source Superstore is now open!
To celebrate this opening, we’ve produced this seven-part white paper which explores why, and how outsourcing is the most powerful and transformative business tool in existence today. This white paper discusses the arguments for the world’s first outsourcing Superstore, and how Source Superstore will help proliferate the rise, and benefits, of outsourcing to all.
Source Superstore [1/7]: Outsourcing’s past and future
In the beginning, outsourcing was only an option for giant international corporations. It is only recently, that it has been viable and available to smaller business, and now even individuals and ‘solopreneurs’… however, most people are still unaware of this incredible opportunity.
How outsourcing started
Outsourcing, as we know it began about 25 years ago. The Philippines and India were the first countries to provide outsourcing services. The dealt companies provided outsourcing in direct partnership with a client company – with the client company pretty much paying for, and setting up the whole facility – with the assistance of the local company.
Back then, for a company to outsource meant a huge upfront investment. The company was required to set up legal entities, construct offices, and build servers, networking and infrastructure, and provide all hardware and training. The costs were so great, and the hurdles so complex, that it would not have made sense to outsource any less than 1000 people at a time. Typically, the big businesses that initially outsourced, would relocate 10,000+ jobs at a time.
Technicals of outsourcing
Originally, outsourcing was telephony based, and was enabled as the price of international communications dropped. As you can imagine, when the functions were limited to basic telephony, the possible outscoring roles were significantly more limited.
Then the internet happened.
Initially internet functionality was limited and clunky, but it meant that a broader range of data entry type jobs could be done. This removed people from direct services (customer service), to more back end operations.
The trajectory, capacity and competences of outsourcing then rose alongside the evolution of the internet. In the beginning the internet was very basic, and had very low adoption rates. As you know now, the internet is ubiquitous, and touches every part of a business. Alongside the internet, came incredible computing power. Now, almost everything is cloud based, and services can be rented as capacity requires. Much of software, that enables businesses today, is in many cases free, or close to it.
As the world moved onto computers to ‘do their business’, it meant that most of any jobs that are done from in front of a computer, could also be outsourced.
There is a saying that basically anything that is done in front of a computer screen – can be outsourced. And now, today, virtually everything in 80% of businesses is carried out from in front of a computer monitor. That has huge implications for outsourcing, and employment generally.
Sales cycle complexity
Back in the old days of outsourcing, things were very complicated. As mentored above, it was a major strategic and operational feat to set up an offshore outsourced operation. As a result of this complexity, it made outsourcing sales processes very long and complex. If you were moving 10,000 roles to a new foreign country, you could guarantee that there would be a super complex tender, and due diligence process. The stakes were incredibly high, and as such, it was the epitome of big businesses doing big business with big businesses.
The complexity of the sales, cycle, due diligence, setup and on-boarding further meant that small jobs weren’t viable for either the outsourcing service providers, nor the clients. Everything was so rigid and structured, which meant that client acquisition and onboarding costs were astronomical.
This meant that things moved slow, and were clunky. It meant that BPOs would only consider jobs with maybe 100-500 seats minimum, and would require a 2-5 year minimum commitment.
Clearly, this kind of scale and commitment meant that the outsourcing sector was completely out of reach of the SME market. They were basically completely excluded, until recently…
Slowing of growth
There has been an incredible growth in outsourcing over the last 20 years. Once the world’s big-business realised the incredible opportunities in outsourcing, they all flooded over to The Philippines and India. Fast forward to today, and you would be hard pressed to find one big organisation that doesn’t outsource some of their staffing.
Outsourcing has become so big for the Philippines, that it is now the single biggest industry in the country, and contributes over 10% to the GDP.
Then, more recently the growth started slowing down. People become fearful that the outsourcing boom was over, and the industry leaders started referring to it as a ‘sunset industry’…. Growth has indeed slowed, but the future growth of outsourcing has far from stopped.
In fact, outsourcing has only just begun…
Democratisation of outsourcing
In the last 10-15 years, a smaller breed of outsourcing suppliers started appearing. As with any industry the outsourcing service provision became more fractured and diverse. New entrants created a broader range of products that served and suited a broader range of clients and client needs.
This change was partly facilitated but the exponential cheapening of infrastructure provision. As has happened with technology generally, it became many many times cheaper to provide the hardware, servers, internet connectivity and infrastructure that enabled outsourcing to become more cost effective and accessible.
This meant that outsourcing could not only be supplied for cheaper, but it could be increasingly flexible on its terms. As with many things in business, outsourcing supplies changed from a massive commitment and super high investment and upfront costs, to a more simplified, cheaper service based on a monthly cost, with relatively unrestricted contract term lengths.
This meant that outsourcing well and truly become accessible to the smaller businesses of the world.
This has only happened in the last 10 years though, and it remains one of the business world’s best kept secrets…
Engaging with Outsourcing
The ways that people engage with outsourcing have-not kept up with the general modernisation of the industry. The industry has gone through incredible transformation over the last 10 years, with the sector now able to provide almost any business service to any business sector. Professionalism, and skill development has increased beyond comparison, infrastructure costs are a fraction of what they were, and the sector is more flexible than ever with its terms…
However, the industry has not modernised its sales process, and the world is still blissfully unaware of the outsourcing opportunity. Outsourcing is modern sector, but its sales and marketing is stuck back in the dark ages.
The industry has responded well in catering for the SME market, where previously they didn’t, but their sales and marketing approaches have not. Their sales and marketing approaches are still using big-business, enters level approaches – and that isn’t relevant for small businesses of today’s fast-moving world.
Until now, there has been no centralised marketplace for outsourcing. And the world desperately needs one…
SMEs have a mentality and a purchasing process not too dissimilar to a consumer. They make far quicker directions and big business, and often they are made by just one, or two people. Decisions are quick, and the decision making processes are limited. Business owners are busy and so they don’t want to spend countless hours (and big dollars) on research, feasibility studies, tender processes and complex contractual agreements.
They want a simple outsourcing marketplace, where they can educate themselves, and then browse compare, and shop – all simply, safely and quickly… use as they visit online marketplaces for flights, hotels, and clothing…
The future of outsourcing is in SMEs….
The outsourcing industry will grow 10-100 fold over the next few years…
There are 35 millions SMEs in the West, employing 100m people, with $12tn combined revenues. And very few of these companies are outsourcing – 0.5% of that….
The world is moving increasingly online. More and more tasks, are being done from in front of a computer. The internet and software interfaces are getting increasingly powerful, which makes outsourcing cheaper and more accessible to all. The future of outsourcing is in the SME market – eventually, ALL SMEs will outsource…
The market needs to keep up with this trend. Not only does the product need to evolve, but the way that the product is sold, consumed and delivered needs to keep up.
Price war, and commoditization
Over time, we are seeing the outsourcing sector mature and consolidate. There are new startups in the outsourcing space all the time, but product innovation has slowed and consolidated, and pricing is becoming far more competitive. As the sector matures we will see increasing price and service homogenisation, decreasing margins, and a general commoditization of services. The industry is already witnessing this. This is most certainly a good thing for the consumer, but it means that the suppliers have to run and incredibly efficient product, and provide a great service – otherwise they will not survive the increasingly competitive landscape…
It is good to see the common signs of industry maturation within outsourcing, however, it is still a long way from maturity and widespread adoption – and this is hurting the industry and hindering its widespread adoption amongst Western businesses.
Despite now a relatively mature industry, there is still only a tiny fraction of business that actually outsource. It stands to reason that eventually everyone (ie every company) will outsource. We see that already almost all of the big business is outsourcing, but only a tiny fraction of the SME sector is doing it. There are estimates that only 0.5% to 1% of business are outscoring at this moment…. That leaves and incredible growth opportunity and trajectory for the industry.
Standardised services for easier engagement
The future of outsourcing is in the SME space. And SMEs consume services in a similar fashion to consumers… For people to get interested and engage in outsourcing, there have to be easier ‘on-ramps’ into outsourcing.
People have to be able to start outsourcing without it being such a big financial and emotional investment. People are now used to accessing many incredible services and softwares for free – or very close to it. People generally prefer and expect having little or no tie ins…. And outsourcing should be no different.
Of course outsourcing is different, very different, as you are acquiring ongoing employment services, but if there are too many hurdles, surrounded by too much uncertainty and unknowns, then the business simply won’t make their first step into outsourcing, and the industry will regress…
The Source Superstore offers a range of off-the-shelf products, which get them started, easily, quickly and safely, on their outsourcing journey. The Source Superstore offers small simple packages, at easy price points, so the initial commitment is low. These functions make it easier for people to take that first step, and give outsourcing a try.
The Superstore is also standardising outsourcing products and services for the consumer. When products are more easily reviewed and compared, people can buy with more confidence. Currently there is no standard pricing protocols for outsourcing. Pricing is generally opaque and complicated. Pricing is often not written on websites – it is only revealed on further inquiry. This is typical of complex industries, but as we have discussed, it no longer suits the SME market. It simply perpetuates the long sales cycle, and increases the complex on-boarding… This current situation really benefits the supplier, to the detriment of the consumer…
The Source Superstore is leading the charge in the modernisation of the outsourcing sector. Services need to be clear, and simple. Prices need to be clear and simple. Pricing protocols need to be standardised and deliverables need to be easily quantified, comparable, and reliable. And the Superstore is doing exactly that.
Source Superstore [2/7]: Growth of outsourcing is unstoppable
The growth of outsourcing (staff) is frenetic. And unstoppable. The world is always searching for more efficiency, and outsourcing is a big part of that. It is a progressive evolution, and we know well that nothing ever stays the same.
The frenetic growth of outsourcing
Outsource Accelerator recently published a white paper exploring the extent of the potential outsourcing market. We explored how the the future of outsourcing will be happening in the SME/SMB space, and provided some very interesting numbers…
There are over 35 million SME/SMBs across the high-cost English-speaking countries (Unites States of America, Canada, United Kingdom, Ireland, Australia, New Zealand, Netherlands, Norway, Singapore). These SMEs collectively employ over 100m people and generate $12bn in revenues….
This represents a huge market, and a huge opportunity. Currently, less than 0.5% of these SMEs outsource.
We argue that eventually – within 20-30 years – 100% of companies will outsourcing. Yes, 100%!
The reason for this bold hypothesis is that eventually, the concept of “outsourcing” as we know it now, will simply become, and become inseparable to, standard “employment”…
Flexible offices, flexible employment
Eventually, it will all just be called ‘employment’…. Regardless of whether you are sitting in the same office, maybe working from home, working remotely, working from another country, or sitting within an outsourcing service provider’s office….
The future of offices, office space and how that connects to the ‘workplace’ is all radically changing – and quickly…. The new co-working company, We Work is taking the office-space world by storm. They represent the new frontier of flexible, remote, new age co-working space. The fact that they have received over $8b of investments from external funds, validates their hypothesis that traditional workplaces as we know them, will be tipped upside down…
Eventually, employment will become far more flexible…. It won’t matter necessarily where you are located, it won’t matter where you sit…. It will be more about whether you can get the job done, and for what price…. This might seem harsh, but it is a truer meritocracy….
You might also think that this remote working is a more of a pain for companies…. But really, people are overlooking to most significant benefit of this rise of remote work – it exponentially increases the size of the employment market.
If a traditional employer is sitting in a town of 100,000 people, then they really only have a potential workforce of maybe 50,000 to choose from. This 50,000 might seem like a big number, but it pales in comparison to the worldwide job market. There are seven billion people on this planet. About 2 billion of them are actively online now, and in the next 10-20 years, were going to have another 2-4 billion people online.
Outsourcing and remote work, enables access to this world wide job market. Remote resources allow the ‘progressive’ employer to access a potential candidate pool of 2 billion people now, with another 2-4 billion people coming soon…. Of course quality, reliability, and security are all critical issues, but this is true for any candidate, and of course these will continue to be determining factors when choosing an employee. This won’t change, irrespective of where the potential employee is sitting. But the cost and quantity of skilled labour force, will change. Access to this almost infinite pool of people will generate more opportunities at a keener price.