WHEN JOSEPH-MARIEJacquard, the French inventor,developed the Jacquard loom inthe early 1800s, little did heknow that he would be startinga chain of events lasting wellinto the 21st century andbeyond.

The loom enabled a singleoperator to weave complexpatterns. Although thesepatterned fabrics fetched highprices, the labour required toproduce them often eliminatedany profit.

Later, Jacquard introducedinnovations that enabledautomatic pattern weaving.This loom started atechnological revolution in thetextile industry, and the systemof punched cards used in itsoperation became a prototypefor the first mechanicalcomputers which have led usnow to the dawn of the inter-networked era.

Jacquard’s application oftechnology to an unwieldyprocess of production is akin toour current state. Then, likenow, the process of productionrequired innovative process andtechnology changes in order toretain higher profit margins inthe business.

Today, the thinking that ledto the first mechanicalcomputers is leading to thecreation of remote intelligencefarms in the developing world.If we can find people withmatching (and exceeding!)brain power to work on ourproducts/services at a fractionof the current costs locally, thensurely that’s where we want tobe. And we can do this withoutissuing individual employeecontracts.

Where Jacquard’stechnological revolution of thetextile industry was triggeredbecause he needed to squeezesome additional margin, we see

the same today.Currently, in the US and UK,

software houses are setting upfactory-like operations in Indiacreating the next wave ofleading-edge applications;utility giants are operating theircustomer call centres remotely.These new outsourcing modelsare becoming commonplace.

New landscapeThe internet is producing aparadigm shift in the way welive and work. In the HRfunction, it has created theability to:● Efficiently gather detaileddata and knowledge.● Target at an individual levelbut with mass media reach andeconomics.● Conduct bi-directionaldialogue and lateralinformation flows.● Easily bridge disparateinternal and external systems.

These attributes havetogether created anenvironment where the ‘alwayson/always there’ feature isentirely possible.

The effect has been to bringthe world closer to a zero delayin time-to-communicate andtime-to-deliver ratios. It hasgreatly impacted on theinnovations of the 3Cs –computing, communication andcontent.

Innovations driven anddelivered by the internet includefaster, smaller and morepowerful computing power;telecoms innovations such asbroadband and Voice overInternet Protocol (VoIP); andever richer content.

The phenomenal collapse oftime and space on a global scaleis a key contributing factor inthe outsourcing development.The emerging internet-relatedtechnology is used to push andpull electronic business

information through businessprocess pipes to highly skilledpeople resources,notwithstanding their physicallocation.

The greater the collapse oftime and space, the greater thedrive to find ever morecompetitive advantages in themarketplace. This is needed toachieve better commercialresults and improvedshareholder value. This way ofliving and working is fastbecoming the norm and isintroducing a whole new set ofdynamics into organisations.

Radical outsourcing of thiskind is not limited to business-to-customer interactions, as inthe examples above, but also tobusiness-to-employeerelationships. In the latter, valueis not measured directly inmargins, but by using methodssuch as key performanceindicators and aligned businessobjectives to measure realisedsuccess.

HR functionThese days, organisations havecome to rely on smart HRfunctions for proactive supportand business planning.

In a typical scenario, an HRservice delivery model might beproduced from an analysis ofbusiness processes. This modelwill define, for each businessprocess, how the service will bedelivered and how access to theservice will be obtained.

For example, training servicesmight be provided by anexternal supplier but only on anational basis to allow fordifferences in course contentand other geographicconstraints. Likewise, graduaterecruitment may best beprovided by each business unitoperating separately on anational basis to reflectdifferences in the culture or

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Outsource or die?Organisations used tooutsource non-coreoperations. Now internetand other technologydevelopments mean thateven core processes likeHR are up for grabs.Joseph Ajuwon reports.

style of the organisation.Using the service delivery

model as a basis, theorganisational structure todeliver the HR services can thenbe designed.

The organisation may consistof a number of components,such as centres of expertise,service centres, locallyembedded specialists or externalpartnerships to deliveroutsourced services. Each ofthese will be reviewed againstthe original businessrequirements. This may includea full review of the outsourcingopportunities for a particularservice, such as payroll, trainingor even compensation.

At this stage, the organisationwill also consider the skills andcompetencies required of itsstaff, and will include asubstantial component workingon the outsourced group.

This group will need to bemanaged by the HR function aspart of the extendedorganisation. A variety oftechnologies may be employedto deliver these services, anissue which is also addressedduring the design phase.

ChallengeJust as financial and operationaldirectors are kept awake atnight trying to work out whichcore functions to outsourceeffectively to improve thebottom line, HR directors aresimilarly challenged.

The HR function that haddifficulties with pay dataaccuracy and employee detailsin the early 1990s will have toshow that it has learnt itslessons well as the world ofwork is now being transformedby a continuingly diverse anddemanding workforce – aworkforce well versed in thevagaries of the information ageand no longer restrained by theboundaries of time and space.

In this new technology-laden,mobile knowledge workerworld, the HR function needsto be able to view and deliverservices to employees throughan event lifecycle model – acradle to grave approach.

‘Employees’ will include theentire extended organisation –local, national, regional andglobal. This will cut across in-business unit, country specific,shared and outsourceddimensions.

The process re-engineeringprojects of the 90s showed thatdata accuracy, defining the end-to-end HR process, andeffective process execution werecritical for any organisation.

Today, there is a need to keepreviewing and modifying thisend-to-end process so it remainsrelevant to the organisation asthe process reaches beyond thefirewall to partners, suppliersand providers – and maybeeven old competitors in anaggregating market.

This can also be thought of asstrategy delivery: the effectivedelivery of HR strategy to meetits objectives to the business interms of competitive advantageand shareholder value.

It is the aggregation of valuefrom several processes(transactional andtransformational) which allhave some element of strategyin their design that can reallydeliver the kind of sustainablebreakthrough performance thatorganisations seek.

In our outsourced model, theHR function has the capabilityto create an environment where

the employee feels empowered,encouraged and enthused tocontribute creatively to a team,be it at project, business unit,country, regional or continentlevel.

This can also lead toincreased employee loyalty. Inthis kind of culture,organisations are becomingmore aware of the importanceof the knowledge employee andthe opportunity that it allowsthe HR function in leveragingthis asset for the organisation’scompetitive advantage.

This is typically where thecorporate communicationsfunction has a significant role toplay.

A mistake often made byorganisations is to focus eitheron business processes alone oron the IT architecture.

A preferred approach is toconsider an HR transformationprocess across multipledimensions, each closely linkedand aligned to maximise thebenefit to the organisation.There should be a strongconnection between not onlythe business processes andtechnology, but also across theorganisational structure, people,required behaviours and thekind of HR service delivered.

The outsourced componentbecomes critical in thisintegrating model. Only when

these aspects are aligned andmanaged properly will theorganisation be trulytransformed and able tofunction at its most efficient.

When this linkage occurs, theorganisation will be flexibleenough to cope with changes toany dimension.

In conclusion, asorganisations seek out pocketsof knowledge and skill on ashrinking global map driven bylower production/servicingcosts, the HR function has todemonstrate that it can lead anddeliver a transformedorganisation that includes awell-understood and verynecessary outsourcedcomponent.

It ceases to be an argument ofthe heart but one of the headsupported by a robust businesscase.

One thing is certain: thelandscape is shiftingsignificantly because of theupcoming outsourcing modelsand their hybrid variations.What organisations used tounderstand as core operationsare no longer core, and viceversa. This is causing a rippleeffect for the entire servicedelivery model and theextended organisation at large.

Outsource or die? Goingback to Jacquard’s early logic, itmight not be an exclusive ‘or’ atthis point, but, as you wouldexpect, the land grab has begunat internet speed and theadoption lifecycle is beingredrawn in public and privatesector alike.

In some instances,traditionally conservative publicsector organisations arepioneering the curve, jumpingahead of the private sector. Butall results-focused organisationswill need to respond to thisclarion call – doing nothing willnot suffice.

● Joseph Ajuwon is a seniorconsultant in HR and e-business technology. He hasrecently left Mercer HumanResource Consulting to pursuean independent career. Email:jajuwon@btinternet.com.

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Joseph Ajuwon: the land grab has begun at internet speed