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Jobs vulnerable to outsourcing

Do you see ABAP and/or programming positions more of a target for outsourcing (to India, Philippines, etc.) or do you think functional/configuration positions (SD, MM, FI, BW) are also vulnerable?
Good question - one that I'm sure a lot of functional consultants are glad you asked! In truth, SAP has been trying for years to make the need for functional consultants less intense. Note that outsourcing and cheaper consulting options are only one piece of this strategy. Pre-configured solutions, tailored to specific industry situations and leveraged on the success of previous SAP customers, is another important key aspect of this approach. In terms of outsourcing, it is true that functional positions are less likely to be outsourced than technical programming roles. The reason for this, in a nutshell, is that programming is, to a certain degree, a "universal language." Once you get into functional outsourcing, you are getting into a deeper level of complexity involving the nuances of how business processes and cultural business practices vary from country to country. And of course, we know that most SAP installations are still not "out of the box." Most of the larger companies that use SAP are determined to customize it so that it meets their needs. This kind of customization and personalized configuration does not lend itself well to outsourcing. Also, I think companies are reluctant to outsource functional areas which actually are "mission critical" business processes. All that business school talk you hear about "focusing on core competencies" ties in here. What I am saying is that companies tend to keep the projects in-house that are closely tied to their competitive advantage, as many SAP functional areas are.

Having said all that, I do expect to see more functional outsourcing in the future as some of these complexities...

are overcome. And as SAP moves into the small business market, we will see more outsourcing of functional roles from these smaller companies that are used to buying their solutions "out of the box" and can't afford extensive customizations. From what I've said so far, it makes sense that SAP HR would be the first area to be heavily outsourced on the functional side. Companies are used to outsourcing their HR functions, and core HR processes like payroll are hardly a key to a company's competitive advantage. I think it's also possible that some "vanilla" financial areas will be outsourced more frequently, but here we have the specter of Sarbanes-Oxley and other strict reporting requirements to consider. In terms of other functional areas, I can't foresee a situation where companies outsource their core manufacturing processes. Therefore, I expect to continue to see most of the outsourcing take place on the technical side. But that doesn't mean that all SAP consultants, technical and functional, should take outsourcing lightly. Success for an SAP consultant means staying on your toes and keeping your skills sharp. That was true before outsourcing took off and it's certainly true now.

This was last published in July 2004

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