November 16, 2011: As the competition for skilled labor increases, companies might be forced to outsource their business functions in order to ensure growth. In most of the cases companies adopted outsourcing as a means to reduce cost, but now they have another reason to outsource their functions. They are forced to use offshoring and outsourcing as a means for growth and sustainability as they face competition in obtaining skilled labor. This is a result of the prediction that the labor market will become tighter in the next 5 to 10 years. The shortage for labor is because of the fact that there won’t be enough graduates to replace the baby boomers who will retire shortly.
The need for outsourcing and offshoring to meet the shortage of skilled labor was advocated in the reports published recently by Deloitte. This would also relax the employees to engage in more productive task.
According to Jody Burton, advisory partner at Deloitte offshoring and outsourcing is a good option for those who find it difficult to find skilled employees. She says that the challenge the organizations face is with deciding which task to outsource and which task to perform in house. Outsourcing was hit when the public considered it as an act of stealing jobs and when the service providers did not deliver as the clients expected in terms of quality.
The survey conducted by Deloitte has found that 77 per cent of the chief financial officers were of the view that the organization will face serious shortage in skilled labor in the years to come. 44 per cent of the 85 CFO’s said that they expect that the demand for such skills is going to increase as years go by.
To overcome this shortage some of the CFO’s has changed the recruitment pattern or started to think of outsourcing or offshoring their non core business functions, the report says.
Ms Burton says that the skill gap in India has reduces as a result of the increase in standard and quality of the education. According to her outsourcing was a service offered based on a contract which has now become an important part of some business.
Earlier outsourcing was considered to clear managers of their responsibility, but now it has become an extension of the business which requires constant attention. There are some functions that cannot be outsourced such as research and development, engineering etc.
Rob DiMonte says that many companies have outsourced their accounting jobs due shortage of accounts, to India and Malaysia. He added that requirement of each business is different and the decision to outsource depends on the business.