My last three blogs (The Growth of Knowledge Process Outsourcing, Evalueserve’s KPO Service Offerings, Understanding Evalueserve’s KPO Business) discussed the emergence and rapid growth and evolution of the Knowledge Process Outsourcing (KPO) industry and market. As I discussed, this industry, which was borne of and enabled by the boom in IT Services offshoring, takes the offshoring of services into totally new directions. The most basic of this work extends the IT industry’s experience in outsourcing standardized, structured, rules-based tasks into a number of more broadly defined, less structured and more discretionary functions.
The Evolution of Offshorable Services Jobs
More importantly, just as IT outsourcing progressed up the value chain from ministerial jobs, such as the maintenance of old legacy application into more conceptual work, such as in architecting of distributed Internet-based applications, so too is the outsourcing of a broad range of other “knowledge-based functions”. KPO is rapidly extending the offshoring of knowledge-based services:
- Beyond jobs that consist of standardized, repeatable processes, are easy to learn and can be readily monitored and tracked (such as application maintenance and call center operator);
- To those that require analytical (like financial and market analysis), conceptual (like legal research and architectural design) and, in some instances, innovative (scientific research and industrial design) skills. These services are typically less structured and manageable, entail greater discretion and, increasingly, require ongoing coordination with professionals in other countries.
But to understand the real implications of KPO, you must combine the rapid growth in the type and number of jobs that can be performed offshore, with the:
- Rapid growth in the number of foreign—and declining number of U.S.—professionals with science, technology, engineering and mathematics (STEM) training;
- New information technology and communications (ITC) capabilities that allow work to be seamlessly performed and transferred across geographies and time zones; and
- New management and collaboration practices that permit business processes to be componentized and workers from remote locations to seamless collaborate on complex tasks.
The result, as Princeton University’s Alan Blinder concluded in a 2007 study that was corroborated by an independent Harvard Business School study—between 21% and 42% of U.S. jobs have the potential of being outsourced. (Not that they necessarily will be outsourced, but that they are potentially outsourceable.) And, unlike the case with manufacturing jobs before them, the majority of these new positions are knowledge jobs that typically require college degrees.
Opportunities for U.S. Knowledge Workers
What does the growth and changing nature of knowledge outsourcing in general, and KPO in particular, mean for U.S. knowledge workers? Two things:
- Regardless of whether Blinder and HBS’s numbers are right, the U.S. will undoubtedly lose millions of traditionally secure white collar jobs to offshore providers over the next decade; and
- Although Indian providers will continue to source many jobs offshore, even they will be hiring American workers as firms including Evalueserve, Infosys, Wipro and Tata Consulting Services open, acquire and expand delivery centers in the United States.
What does all this mean to current and prospective U.S. knowledge workers? As I have discussed in recent posts, the U.S. will always retain millions of existing knowledge jobs and will continue to produce millions of new ones. The difference is that employers will look for very different types of skills than in the past. Those workers that Thomas Friedman calls “the average practitioners”—those people who perform routine tasks and those that wait for work to be handed to them—are becoming an endangered species.
Knowledge workers that hope to qualify for the secure jobs of the future—both in domestic and offshore firms—will require different sets of skills than those of Friedman’s average practitioners. As discussed in my report IT Companies as Catalysts in Creating the 21st Century Workforce (click here to see an excerpt or here to request a free copy of the full report), these workers must be able to innovate, analyze and communicate. They must increasingly possess a new set of core skills that include:
- IT, not necessarily in developing and managing IT environments, but in understanding which IT tools are most applicable to a chosen field and how to apply them to deliver business value;
- Communications, the combination of writing, speaking, presentation (and optionally others, such as multimedia and video) that will be so essential in selling one’s ideas;
- Internet (to the extent that such skills will not be innate in new-generation workers), which provides all employees complete access to all the information they need and the social networking tools and techniques that will be increasingly required to find allies, build consensus and effectively sell one’s ideas (both within and outside of their organizations); and
- Mathematics (particularly analytic techniques and supporting capabilities such as statistics, modeling and simulations) to help workers derive true insight from, and develop innovative solutions based on the huge volumes of digital information that are becoming available to all knowledge workers in all disciplines.
People who possess such skills will produce higher value for their employers (whether domestic or foreign), enjoy higher salaries and better job security and will be in greater demand by other companies. Those that lack such skills will suffer the opposite fate