Outsourcing

One of my main grouses about Management is a lack of really innovative ideas that leads to a paradigm shift in thinking. Whenever a concept becomes a Fad like Six Sigma, Activity Based Costing etc and is being talked about as the next great thing to happen to Management, I have a sense of Deja Vu about it.

Let us the take the Systems concept in Management which made an entrance in 1970's , died a natural death and resurfaced again in the new millennium. If you go back to the beginning of the last century and do a critical analysis of the Scientific Management theory of F W Taylor, you will notice an eerie similarity.

The latest is the concept of 'Out sourcing'. Simply put, this means using external organizations/individuals to handle certain aspects of your organizations activities where either you don't have core competence or you don't want to develop core competence as the work could be routine and mundane.

In olden days, there existed a system of Wet Nurses. These were ladies, normally from the lower strata of the society, who breast fed babies belonging to rich families. This was necessitated either because the child's mother had medical problems or died in child birth or was plain lazy to breast feed her child. In management parlance, I would call this 'out sourcing'.

In Kerala, by early 1960's, when the land reforms were put in place, the land holdings became smaller and as such many of the landlords (Janmi) found it not very profitable to cultivate the land on their own. The fact that their next generation was not keen on an agrarian vocation as compared to a Government Job also contributed to this. The land was anyway being cultivated by the landlords employees (Kudiyan). The landlord stuck a deal with him whereby the Kudiyan will cultivate the land in return for an annual fee by way of paddy or money. Outsourcing or leasing or franchising. You may categorize this practice under any of these.

I noticed something in my hometown recently. Lot of people from Palghat migrated to Mumbai in early 1950s and 1960s in search of a job. They struggled there, made their money, bought a house then for Rs 50000. Now, they are all retired and not keen to continue living in Mumbai because they long for their roots. It makes financial sense too. They sold of their house which they purchased long ago for nearly Rs 80-90 lakhs, gave a portion of it to their children and purchased a house for Rs 15 lakhs in my hometown. They still have about Rs 30 lakhs in Bank that is sufficient for them to lead a comfortable life. The problem is that both are quite old, it is difficult to get servants in my home town. Now comes the interesting part. Palghat is full of agraharams and there were many cooks who used to take job orders for marriages and other functions. These guys have become quite enterprising and most have gone up the corporate ladder by starting Catering Companies. Palghat is flooded with Catering Companies. Apart from cooking for feasts, these entrepreneurs have hit upon a novel idea. They have identified a target market in these Mumbai returned old people and have offered them home delivered quality food thrice a day including the plantain leaf that will be used in lieu of plates. And on auspicious days, these old people even get a portion of the feast as anyway these companies prepare them. The cost is Rs 2000 - Rs 2500 per month per person. The cost of food for a family of two works out to Rs 5000. Cute isn't it? It is a win-win situation. The elderly people had their worries regarding cooking, cleaning vessels etc taken care of and the Catering companies, most of whom have about 100-200 customers get a steady income that takes care of their overheads. Come to think of it, can't we call this outsourcing?