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Future Trends and Challenges

Economic globalization and the ICT revolution provide fertile ground for new forms of outsourcing and offshoring. In this chapter, we highlighted the progression of outsourcing to best-sourcing using examples from two important industries. In doing so, we demonstrated how innovation is generated when industries maximize the utility of technology and essentially operate in a virtual environment by seeking the best global talent and resources regardless of national borders. We also show how increased complexity in these industries has been met by more innovative tools, policies, and strategies developed by best-sourcing firms. Simultaneously, we emphasized that outsourcing is not new. It has existed for more than a century and in this sense, the future will be no different. New forms of technology will continue to be disruptively innovative leading to significant strategy and market shifts (Christensen, Raynor, & McDonald, 2015). Quite possibly, the once-distant phenomenon in science fiction novels is closer than we imagine. The recent proliferation of cloud-based technologies will further boost “virtualization” of firms. The progression of the corporation from a national to a multinational entity will evolve to the next generation, possibly into a seamless web of best-sourced people and processes around the globe bound together by a common vision and mission and managed through collaborative tools leading to a plethora of innovations. The virtual corporation will have an amoeba-like structure that is constantly changing to meet current needs and assimilate best practices wherever they are located across the globe (i.e., such trends are already evident in innovations such as Bitcoin).

Nonetheless, this utopia of sourcing will not be without significant challenges. As noted by Woodard and Sherman (2015) , much of the offshoring literature has focused on macro-level issues (e.g., why firms decide to offshore and why some ventures succeed while others fail), without considering the impact of exporting jobs on the attitudes and behaviors of the individuals who are performing the work. Specially designed HRM policies and practices need to be developed to keep workers motivated and engaged. The dearth of information on effective performance management systems for outsourcing work is especially noticeable in developing countries, such as Poland (Buchelt, 2015). Poland is one of the fastest growing economies in the EU and is ranked 9th for top countries in the world for outsourcing (Buchelt, 2015) . Lajili (2015) has developed a conceptual framework, which suggests that HR policies intended to build and invest in human assets differ according to governance designs—that is, hierarchy (or firm governance), contract-based arrangements (or outsourcing/offshoring) and market-based (or arms’ length) employment contracts. In a similar approach, Andersen (2015) hypothesized that successful implementation of: (a) “tactical offshore outsourcing” requires skill capability, inter-organizational communication, cross-cultural competencies and inter-organizational leadership; (b) “strategic offshore outsourcing” must be supported by knowledge management, human resource development support for innovation, and change management; (c) “transformational offshore outsourcing” is suitable for such HR practices as knowledge sharing and organizational development.

It also is important to recognize that the borderless virtual corporation is in fact grounded in a world bound by the national boundaries and regulations. Indeed, many thoughtful and novel regulatory changes are required to manage an evolving virtual corporation. Current regulations around cross-border immigration, finance, data privacy, intellectual property rights along with individual and employee rights need to be continually examined and re-examined. For example, while private firms are accustomed to best-sourcing, governments, often the most inefficient entities in many societies, struggle with outsourcing processes. In the past, the USA postal service outsourced some activities and now it has an arrangement with Staples (a private firm) to handle mail (FSRN, 2016). What's next? Social Security? Healthcare? Defense? For many, the question remains, exactly, where do you draw the line? What should be outsourced or in our case “best-sourced” next? Services traditionally provided by government? What are the implications and how will unions respond? Will employees be paid well? How will companies balance efficiency needs with quality and care for employee wellbeing? Rightly so, many governments struggle with the need to balance efficiency and employee wellbeing. The struggle between technological determinism and economic globalization on one side and individual, human and sovereign rights on the other will continue to be hotly contested. The pull of a borderless virtual corporation will incessantly push against societies bound by borders and undoubtedly, there will be a storm (or two) before the quiet.

 
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