When three degrees of subcontracted separation from a client constitutes a meaningful customer relationship and 50 people doing data entry in a seventh floor flat in Kolkata represents a $100 million valuation in the minds of the promoters, all systems are moving full bore in the frenzied world of BPO and outsourcing. This momentum is a manifestation of many events as well as timing. Contributing factors range from the already well documented opening up of hitherto closed economies, corporate emphasis on cost reduction, corresponding process improvements, nationalism, rational and irrational exuberance as well as what in the end may be the most compelling factor, the global quest for high caliber talent.

Outsourcing connotes many images from the IPO millionaire to the disenfranchised workers who feel that ‘their’ jobs are being exported to the hapless tech support worker frantically trying to communicate with a frustrated American housewife trying to get the latest cake recipe downloaded from MarthaStewart.com. These are but a few of the many scenarios that repeat themselves multiple times a day, every day, of every week, of every month, you get it.

The core dilemma that providers and users of outsourcing services face is in fact the dearth of talent to meet the business world’s increasing appetite for world class third party services, such as customer care, telemarketing, analytics or traditional application maintenance or infrastructure management. This may seem implausible given the coverage of India, China, Eastern Europe, the Philippines and Latin America as limitless and burgeoning hubs for skilled workers to execute this litany of activity. The reality is that the education complex in these countries is simply not equipped to produce the caliber and volume of workers required to grow the BPO/ITO industry in a sustainable fashion.

Some of this is being offset by forward thinking companies such as State Street, who through their partnership with Zhejiang University in Hangzhou, China created a genuine global talent resourcing partnership way back in December 2001. IITs and the regional technical colleges in India are also doing their part and one can cite several examples of corporates partnering with and even investing in higher education in order to address this increasingly complex talent crunch.

The big challenge behind this talent crunch is the fact that outsourcing for cost has essentially become irrelevant. If service levels and deliverables do not meet customer or more importantly end user satisfaction, low cost falls to the bottom of the criteria in the question of whether to outsource or not. As State Street’s Joe Antonellis, the company’s Chief Information Officer insists, though cost is one of the advantages of his company’s program, it is not just about cost savings. The graduates are paid, he says, adding, “this is not a sweatshop”.