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What's "Decentralized Outsourcing"?

Acorns
February 6, 2023

Teams, Tools, and Alignment for the Future of Work

The Business Process Outsourcing (BPO) industry is a significant player in the global professional services market. The sector is projected to reach over $500 billion globally by 2025. BPO enables organizations to outsource their non-core functions to third-party service providers. As a result, these providers can deliver services more efficiently, cost-effectively, and with specialization. However, the centralized nature of traditional BPO models presents several limitations, including security, transparency, and equity and inclusion, which have become increasingly important in today's remote-first environment. With the rise of decentralized labor and web3, a new model of decentralized outsourcing is emerging that promises to address these limitations and provide a more secure, transparent, efficient, and equitable way of outsourcing non-core functions.

The Business Process Outsourcing (BPO) industry is a significant player in the global professional services market. The sector is projected to reach over $500 billion globally by 2025.

Business Process Outsourcing (BPO)

BPO refers to outsourcing non-core business processes to a third-party service provider who can deliver these services more efficiently and cost-effectively. BPO can be broadly categorized into two types: back-office outsourcing, including functions such as payroll management, accounting, and human resources, and front-office outsourcing, including functions such as customer service, marketing, and sales. The main objective of BPO is to reduce costs and improve the efficiency of non-core functions.

Web3

Web3 is the next generation of the internet, based on decentralized systems. It empowers users to own their data and control their online identity. Stakeholder economics is a key concept in web3, where stakeholders have a financial interest in the network and contribute to its growth. Equitable incentive structures ensure that all stakeholders, including developers and users, are fairly compensated for their contributions. Web3 enables these features through blockchain technology and decentralized applications (dapps).

The Future of Work

The future of work is characterized by a fractional and remote nature, with workers increasingly working from home or remote locations. This shift has been accelerated by the COVID-19 pandemic, which has led to a significant increase in remote work. The fractional and remote nature of the future of work presents several challenges, including security and transparency issues, which can be addressed through decentralized outsourcing.

"Decentralized Outsourcing"

Decentralized Outsourcing is a new approach to BPO that leverages the benefits of decentralized labor models and the fractional and remote nature of the future of work in which we live. Currently organizations outsource their non-core functions to a global talent pool through decentralized platforms like Deel, Remote.com, and Upwork. The web3 layer will come into play as companies begin to use tokens as a form of ESOP for non-FTEs more regularly. The decentralized nature of this model provides a secure and transparent way of outsourcing work, eliminating intermediaries, reducing administrative costs, and creating more aligned incentive structures, leading to a more efficient outsourcing process.

The web3 layer will come into play as companies begin to use tokens as a form of ESOP for non-FTEs.

Benefits of Decentralized Outsourcing

Security: Decentralized Outsourcing provides a secure and tamper-proof record of all transactions through the use of blockchain technology, ensuring the outsourcing process is protected from cyber threats.

Transparency: Decentralized Outsourcing provides all parties involved in the outsourcing process with a clear view of the work being done, contracts being signed, and payments being made, increasing transparency and accountability in the outsourcing process.

Efficiency: Decentralized Outsourcing eliminates intermediaries and reduces administrative costs, leading to a more efficient outsourcing process. The decentralized nature of DO also enables organizations to access a global talent pool, leading to better matches between organizations and service providers.

Flexibility: Decentralized Outsourcing provides organizations with greater flexibility in managing outsourcing contracts, enabling them to choose from a wider pool of talent and service providers.

Equity & Inclusion: Decentralized Outsourcing enables laborers to participate in the value they create for clients through web3 mechanisms, such as tokenization. This makes an equitable and inclusive outsourcing process where all parties benefit from the value generated.

Decentralized Outsourcing enables laborers to participate in the value they create for clients through web3 mechanisms, such as tokenization. This makes an equitable and inclusive outsourcing process where all parties benefit from the value generated.

Decentralized Outsourcing sits at the nexus of traditional Business Process Outsourcing (BPO), decentralized labor, web3, and the future of work. It will be interesting to see how these fields converge over the next decade.

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