The Agile Executive

Making Agile Work

Beyond Labor Arbitrage

with one comment

It is a little late for 2011 predictions. However, I believe you would still find the following prediction of interest:

I would be a little nervous these days if I were in the outsourcing business. My ability to recapture value through labor arbitrage is being eroded by the twin  ‘brothers’ – Social Networking and Kanban. A third ‘brother’ – Cloud Computing – enhances and accelerates the erosion.

The rationale for this prediction is quite straightforward. Forward-looking development managers utilize three trends to achieve impressive results in productivity, time-to-market and cost of software. They “acquire” talent on a per-task basis wherever it resides through marketplaces such as oDesk and uTest. They procure computing resources inexpensively, when they need them, through the good services of Amazon Web Services or similar providers. And, they effectively oversee the work stream(s) of dispersed programmers and testers through Kanban tools such as LeanKit Kanban. In addition, they employ collaboration tools like Sococo to compensate for the harsh realities of most offshore software projects wherein team interactions need to occur across the pond. By so doing, they are able to carry out expert sourcing on their own at a fraction of the cost a global outsourcing company would typically charge.

Click here for full details. IMHO what we are starting to witness is really transformative.

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Written by israelgat

February 6, 2011 at 7:25 pm

One Response

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  1. Accenture, one of the labor arbitrage leaders, just reported record revenue for the past quarter. Because of this companies like accenture are not reacting to market forces. Once their clients begin to change, Accenture, IBM, HP and a host of others may very well be caught flat-footed.

    In order for the vendors to be threatend clients will have to adapt to these hire direct on demand services instead of staying with their preferred vendor model. I think that the risks of the direct on demand services model will prevent Fortune 500 companies from moving away from their preferred vendor models for at least the next three years.

    Walt Wyckoff

    April 8, 2011 at 2:00 pm


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