Thursday, September 23

The Micro-Multinationals and Extreme Personal Outsourcing

Wired has this article on extreme outsourcing which means that not only big MNCs but even Startups and small time contractors are outsourcing their jobs/work. Sill Jason Pontin maintains a view that its still a job creating venture.

Wired : Micro-multinationals turn inside out an organizational fad of the 1990s: the incubator. But whereas incubated startups divest some business functions to their investors, micro-multinationals purchase these functions from subcontractors. Incubators allow startups to concentrate on what economists call a "comparative advantage" - the thing that any economic entity does best and most cheaply. Alas, incubated startups were also at the mercy of their patrons' whims. Micro-multinationals, by contrast, control their own fortunes.

The wisdom of outsourcing applies to businesses great and small. When companies have some of their operations performed elsewhere, they reduce costs and allocate capital and labor instead to those activities that cannot, or should not, be subcontracted. When businesses use capital and labor efficiently, they can better explore expanding markets. And faster growth creates a need for new workers. The result is almost always a net gain in employment.