| Core Vs Non-Core, an outsourcing opportunity
Gowri Shankar Subramanian
The author is the CEO of Aspire Systems
Over the last two decades, there has been an increasing trend towards outsourcing several non-core business activities. Interestingly, the definition of what is non-core keeps evolving and many core activities keep getting converted to non-core. So, what\'s the limit and where will the line be drawn eventually in terms of what should be done internally and what can be outsourced?
Outsourcing, as a topic, has been debated extensively, but as it becomes global in nature much of the heated debate is around job losses to China and India. Leaving aside geopolitics, what needs to be looked at is how far can outsourcing go towards improving a firm\'s productivity (with productivity defined as revenue per employee).
There has been a substantial climb in productivity over the last two decades with companies like HP, Cisco and Microsoft having revenues in excess of $500,000 per employee. While it is easy to attribute this to the IP and brand advantage enjoyed by these firms, it is also true that these firms employ tens of thousands of people in their extended outsourcing ecosystem and this allows them to constantly innovate and not be distracted by non-core activities that can be done better by an outsourcer. Given this trend, how much more can productivity levels climb?
Today, all activities from order-taking to logistics, support, IT and finance are outsourceable. The rapid evolution of technology and shrinking of distances has only contributed to accelerating this phenomenon and has made outsourcing more profitable by bringing global talent to the table.
What is core is now considered to be R&D, Marketing, and of course, Strategy. But even this is being questioned on an every day basis. If we are to take the example of software product firms (Independent Software Vendors), product development was once considered a core activity and hence non-outsourcable. But now things are changing with the advent of a new breed of Outsourced Product Development companies whose only mission is to make core product development an outsourceable activity!
Given this trend towards continuous increase in the scope of what can be outsourced, will we one day see a billion-dollar company with just one employee and everything else outsourced? While I might be exaggerating what is possible, this question provides a fundamental philosophy around which we can build a business - outsource everything you possibly can to achieve the maximum productivity levels.
Any firm has to make a call on how it will react to this trend -- either deliver a product/service and tap these outsourcing trends in every aspect of its business or become an outsourcing firm itself. While this vastly simplifies matters, it provides a premise on which to build a firm\'s philosophy. Outsourcing firms will employ people on a massive scale and will have lower revenues per employee, while others will focus on figuring out how best to tap the outsourcing ecosystem to build a high-value, high-productivity business.
Naturally, following the tenet of speaking from experience, the question is what have we done at our firm? If everything is outsourceable, there must be someone to outsource it to and we focus on providing that service in one niche area of software product development. Traditionally, product development has been viewed as one of the core competencies of ISVs. But we firmly believe otherwise and we have helped many ISVs to change this mindset and reap benefits. Except for this specialist business activity, we try to outsource everything else required for our own internal requirements.
Given what we see happening around us every day, I am sure the day is not far off when we will encounter a billion-dollar company with just one employee! | 
