Whenever the world’s stock exchanges suffer a significant loss, the first thing analysts begin to wonder is whether the movement is a market correction. Such questions are reasonable, given the fact that markets cannot maintain continued upward growth indefinitely. Market corrections are both normal and healthy for stocks. If we apply that same thinking to the arena of corporatism, one wonders if the recent surge in nearshore outsourcing alongside corporate downsizing constitutes a market correction of sorts.
Corporations tend to be monolithic organizations that become increasingly more political as they grow. When a corporation gets too big, it also tends to be less responsive to the needs of both customers and employees alike. The inevitable result is a board of directors that eventually reaches the conclusion they need to downsize to better focus on its core business. What they lose by downsizing they make up for in outsourcing. Nearshore outsourcing has enjoyed strong growth in recent years because of this phenomenon.
Since the late 1990s, some of America’s biggest corporations have gone through significant overhauls. Take Hewlett-Packard, for example. For the last 15 years, the company has been acquiring, selling off, organizing and reorganizing at a frenzied pace. One of their latest iterations, Hewlett-Packard Enterprise Services (HPE) is in the midst of its own fire sale. In the UK alone, some 1,100 people have been put on notice that their jobs may be eliminated soon. All of this is being done as HPE is seriously looking at its outsourcing model.
One Man’s Bread is Another’s Butter
It is never a good thing to see people lose their jobs due to downsizing. But in the tech world, one man’s bread is another’s butter. Many of the people who are victims of HP’s downsizing will likely be able to find work with a smaller company that provides essentially the same kinds of services. Some may even find themselves once again working for HPE on an outsourced team.
What this suggests is that corporations are reaching the conclusion that bigger is not always better. By taking some operations off-site and turning them over to nearshore outsourcing partners, corporations can still do what they have always done in a way that is more cost-effective and efficient.
Nearshore outsourcing offers the perfect opportunity for corporate downsizing for obvious reasons. Nearshore partners are closer, they are often on the same time (or no more than one time zone away), and they are familiar with the business cultures of their customers. All of that makes for a more productive partnership that meets the demands of the bigger corporations.
Small Business Regaining Influence
Perhaps the most fascinating aspect of the current outsourcing environment is the reality that small businesses are regaining influence while corporations are losing some. Smaller companies offering outsourcing services are being given the opportunity to handle mission-critical tasks without the bloat that comes with corporatism. This is good for small businesses, corporations, and customers alike.
Downsizing among corporations might paint a bleak economic picture in the minds of analysts and Wall Street investors who have depended on corporations to make the money. But down on Main Street, a healthy outsourcing market will end up providing more jobs and creating a more stable economy over the long run. It is like spreading risk on the stock market. A larger number of smaller investments makes it easier to weather market corrections without significant loss.
Nearshore outsourcing is making it possible for corporations to downsize without missing a beat. It would appear that the recent surge in nearshore may actually be part of a market correction of corporatism.