With outsourcing becoming ever more popular, the virtual company is closer to reality. But Maldwyn Palmer warns that companies may have to invent virtual customers, because the real ones will be out of work.
Outsourcing has become the preferred way to increase profitability and efficiency.
The strategy came to fruition when cost savings were proved to be the way forward in the transporting of materials. Instead of funding a costly fleet of lorries, a company could take advantage of public services such as the Post Office or private haulage firms.
If it could work for the movement of goods, what else could it handle?
Companies started appraising the concept of "core" departments. If it was not a centralised part of business or was not unique then maybe it was better handled by an industry expert. Why reinvent the wheel when a specialised adept could do it so much better?
The range was limited at first but, as accountants became impressed by the savings, more areas seemed ripe for attention.
The idea of the virtual company became more appealing and the gradual move to this ideal is already happening.
One fashion house in the US has already done this. The only thing that has remained is the founder’s name on the garment, everything else is farmed out. The design, manufacture, promotions, delivery, sales, accounts are all outsourced. A few trusty ringleaders control the lot from their New York headquarters.
The next step was not only to outsource but to outsource out of the country. Why make things here when it is cheaper elsewhere? Why do the accounts here? Why do the IT here? Why do the support here? These questions were answered by such countries as India, Malaysia and Eastern European countries.
Things may even go further. Who needs an Indian call centre when CRM expert systems could provide a replacement? Perhaps accounts will be handled by smartcard-driven online servers and vehicles deliver goods by remote control.
Oh, brave new world, where everything is outsourced to the third world or thin stacked servers.
Virtual companies do, however, seem to be the perfect answer to increased profit and superior systems. Companies will have lower costs, no strikes and more control over their products.
With a central virtual command core controlling the outsourced virtual departments then the future seems very rosy for first world corporations.
The only problem is that they will have to invent virtual customers because all the flesh and blood ones would be out of work.
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