Outsourcing on steroids

You’ve heard of outsourcing, but have you heard of “outsourcing 2.0”? According to some sources, this is the next stage in India’s outsourcing evolution, and is making waves in the global digital economy.

Dr Sunita Maheshwari is the co-founder of India-based Teleradiology Solutions, a company that provides radiology services to medical centres around the world.

It works like this: a medical centre does an X-ray, CT scan or MRI, and then sends the images via the internet to Maheshwari’s team of qualified radiologists. The team use advanced graphics processing software with built-in artificial intelligence to do a reading of the scans, and provide feedback within minutes.

This service is dramatically improving patient care, especially in remote areas that do not have access to radiologists by making highly qualified and experienced radiologists available at a fraction of the cost of hiring a full-time specialist.

ScanCafe is another Indian start-up. They provide a document and photo-scanning and touch-up service to clients in the US. People send their printed documents or photos to ScanCafe’s US depot, and these are then shipped to a processing centre in Bangalore. There, the documents and images are scanned, saved onto disks and then sent back to the clients in the US. The company also offers an audio and video tape digitalisation service.

ScanCafe also employs a small army of highly skilled, professional graphic designers and video editors who touch up photos and videos at an additional cost. These two businesses may be completely different in nature, but they have one thing in common: they provide a new kind of outsourcing, a kind of outsourcing on steroids, or what people are now calling outsourcing 2.0.

What makes digital outsourcing particularly attractive is that, unlike most other industries, the barriers to entry are low. With just a moderately powerful computer, a good internet connection and a specialised skill set, anyone can start their own outsourcing business. What is more, outsourced work is fairly easy to find on sites like Freelancer.com. Countless Indian start-ups began this way.

This raises a big question: Why is South Africa not riding the digital economy wave like India, Brazil, Malaysia and the northern European countries? There are massive opportunities out there, and we seem to be missing out totally. We have a large workforce, fairly good technology infrastructure and, unlike most of the countries listed above, a relatively low cost of living.

So why are we lagging behind, when countries like India are already evolving into the next stage of outsourcing?

For me, the answer lies in two recent encounters I had with two young people. The first was an intelligent youngster I met on a flight from Cape Town recently, who was studying accounting at the Stellenbosch University, but was passionate about software development.

In fact, he was exposed to coding in high school and had spent over 100 hours developing a video game with a friend. But when he applied to study computer science at university, he was rejected because his maths results were not all that good. What an injustice.

The second was a young man who, despite having an IT degree, was working as a cleaner. His story was all too familiar: he had gone to dozens of interviews, and the response was almost always the same: he had no marketable skills.

These two encounters pretty much sum it up for me. Where decades ago other countries encouraged their youth to focus on the digital economy, we still turn youth away from studying IT on trivial grounds. Where others started preparing their youth with world-class education ages ago, we have youth with degrees who cannot find employment.

It is not my intention to berate our universities, but South Africa is bleeding economically, and we need radical change, and fast.

In the first quarter of this year, more than 150000 people entered the job market. The economy is struggling to find a place for the majority of them, and the unemployment rate now stands at a gut-wrenching 26.7%.

The stakes are high. We may be the most industrialised nation in Africa, but when it comes to ruling the digital space, that is open for the taking; and there are some strong contenders who are quietly going through a digital revolution, such as Kenya, Egypt and Nigeria.

Are we going to be serious contenders, or will we miss out?

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