Wednesday, January 20, 2010

And then there was a trickle...

A company in a developed country wants to make profits. The company has all its employees based out of that developed country. To make profits, they hire some more in a developing country. More work, better too, is delivered at a lesser cost. Since cost to company is less, profit soars. Since no one is fired, it’s a win-win situation.

More and more companies get onto this success formula. It is too good to be true! There is suddenly a huge demand for professionals in the developing country. So much so that the demand has exceeded the supply of college grads.

A businessman who is not really qualified to be employed by such companies of developed countries sees this gap of demand and supply and sees a business opportunity in the form of contracting employees at a brokerage. The contracting business does the talent search for the hiring company, recruits and, if needed, trains the employees for the contractor and augments the companies’ staff as an associate for a defined duration.

This relieves the hiring company to do the painful task of recruiting and training. The company pays the fees to the contractor and the contractor pays a percentage of this amount to the actual associate. So, the hiring company just has to ‘shop’ for talent with contractors for a price. True, the amount to the associate is almost a trickle now, but hey, for a fresh college grad, even a trickle quenches the thirst!

If the company in the developed country had not thought of increasing their profits and had not outsourced, then there would have been no contractors in the developing country. It is this butterfly-effect of one business venture leading onto further business ventures that stabilizes the global economy…and makes this world fascinating to me!


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