Outsourcing and the Global Environment
Abstract
The following paper will detail the impact on businesses concerning outsourcing and the global environment. This paper will outline the needs of the modern business to embrace the concept of outsourcing and the need to educate employees on the diversity of global business practices.
Outsourcing
The need of the modern business to look outside of the doors of the company to improve profit margins has become a necessity in today’s market. The advent of technology and crossing of borders have expanded this search for efficiencies to other countries.
There have been great strides made in the global market to outsource various segments of businesses. One of the biggest gainers in this arena is India. India has been capable of handling several procedures handled by companies such as the customer service phone calls and technical support calls for companies such as Dell computer.
Company outsourcing is often met with extreme resistance from within the country. The first form of resistance arrives in the form of the notion that outsourcing automatically means that a US employee is going to be displaced. This is not always the case. There are often enough jobs to be sent overseas at a reduced cost avoiding the need to hire more domestic employees.
The issue of displaced employees is one of concern and needs addressed. The employee that may be displaced by the outsourcing of company efforts often may be retrained or ...
Globalisation is a growing phenomenon that is the result of various developments in the global environment, each of which merits an individual analysis of its social impacts. For the purpose of this analysis, the focus will be placed upon arguably its most controversial aspect, offshore outsourcing. Offshore outsourcing, or offshoring, is becoming an increasingly common business practice as a result of a combination of the recent technological advancements in the areas of transportation and communication, and the increased competitiveness of the business world. From the perspective of firms, tapping into cheap labor from less developed countries is a very logical business decision to reduce costs and maximize profits. This has not only motivated businesses to engage in offshoring, it has sometimes been critical to their survival in fiercely competitive environments. Before making judgments regarding the righteousness of offshoring from different perspectives, its impact on stakeholders must first be evaluated.
Outsourcing is a complicated and a multifaceted subject that involves a “business[’s] purchase of parts or labor from another company rather than maintaining a sufficient enough number of its own employees to do the same work in the country where the company is already based” ("Outsourcing"). The first practice of outsourcing was in medieval times when “nation-states called in soldiers-for-hire to help their own military forces during ongoing conflicts” ("Outsourcing"). Many think of outsourcing as a one way trade of production facilities moving outside of a companies locale but in actuality it is a two way trade that also involves companies from other areas moving their factories to local areas where conditions are beneficial for the specific business. Outsourcing has evolved but the main idea has remained the same. The recent increase in outsourcing “was initiated by Wall Street pressures on corporations . . . . for increased profits . . . in the production of goods and services marketed in the U.S."(Roberts).
For advocates of global business, the hope is that outsourcing will help lift the United State’s economic growth and development by lowering the input cost of services (i.e. labor and materials) and by opening new markets abroad. Mainstream economists believe that outsourcing will have ...
Outsourcing emerged on the financial arena during the 1980s and has since then been spreading. Outsourcing production was furthered with the process of globalization which provided a new component leading to the strengthening of resources, skill and labor specializations across the world. The process of outsourcing is using the skill and abilities of a third-party to accommodate society on the foundation of labor. As stated earlier, it was during the 1980s that the process kicked off mainly due to the efforts of corporations when they began to hire labor forces across the world. Even though outsourcing has come out from its developing stages, there are still following effects on the US economy.
One of the hottest trends today for big corporations is outsourcing and offshoring. Outsourcing simply means a company based in one nation will hire from other nations in order to more efficient accomplish its goals. It makes sense on the part of the corporation, why pay a programmer in the US $80,000 a year when they can pay a programmer in India less than 1/10th of that salary, and make him a very happy man. This because even when he is earning 1/10th of the US salary, he is still earning more money than he ever hoped to get in that industry in India. It seems like a win-win situation1, but there is still a loser: The growing unemployed population of the US. As more jobs go overseas, more US citizens are finding themselves becoming obsolete.
The significant level of outsourcing programs used across all business sectors is well documented in the literature (Bender 1999; Quinn 2000; Dun and Bradstreet 2000; Klaas, McClendon and Gainey 2001). Past research has progressed along several paths. First, some researchers have focused on motivations and reasons for outsourcing activities (Conner and Prahalad 1996; Greer et al. 1999; Sinderman 1995; Mullin 1996; Grant 1996; Frayer Scannell and Thomas 2000). According to this perspective, the global imperative for outsourcing accelerates as firms evolve from sellers of products and services abroad to setting up operations in foreign countries and staffing those operations with host countries or third party nationals (Greer et al. 1999). Most corporations believe that in order to compete globally, they have to look at efficiency and cost containment rather than relying strictly on revenue increases (Conner and Prahalad 1996). As companies seek to enhance their competitive positions in an increasingly global marketplace, they are discovering that they can cut costs and maintain quality by relying more on outside service providers for activities viewed as supplementary to their core businesses (Mullin 1996; Grant 1996).
When you think of outsourcing it is probably more accurate to think of it not as people's jobs that are going somewhere else but as a job, as in something that needs to be done, going to another business. For example if you have a company of forty people and you decide to get a new computer system for everyone. You may pay another company to do your IT and customer support for those computers. There for you didn't take away a job from someone you just didn't create one for the need. You paid another company to do it. They then can use one of there people who is familiar with the system already, or they take on the cost of training someone.
Kibbe, C. (2004, 07 09). Outsourcing: the good, the bad and the inevitable. New Hampshire Business Review, pp. 1A-21A.
As more companies expand their business globally, they are seeing more opportunities and an increased set of threats to the market. Threats like war, political revolutions, new currencies, and natural disasters can affect growth and political stability throughout the world, so in order to successfully compete in the international market more companies are faced with the decision of relocating part of their operation offshore. This paper will address what key elements companies in this situation need to address, such as, quality of customer service provided, security of confidential information, and the possibilities of cost savings, in order to be sure that outsourcing is the best solution for their company.
While outsourcing is helping with the economic growth in the U. S., American workers thought it to be the result in loss of employment opportunities.
The common reason given by US companies for outsourcing India is high quality and low cost. However, there is criticism that perceived job losses in the US is due to outsourcing and something has to be done to prevent jobs from disappearing to India.
“Country specific cultures can add risk in global outsourcing. Language and work ethics vary from country to country and that may contribute to risk” Dhar & Balakrishnan 2006 . Many of the countries that offer remote IT support such as China and Eastern Europe have very ba...
Outsourcing is a subject in which there is a lot to analyze a talk about. There is many issues which are currently in the air and which are still being debated and will probably be debated for the next few years. What we conclude based on these presented issues is that everything will always have negatives and positives. I think that America should closely look and try to figure something out that will satisfy its own people and not just leave as it is. They should realize that not having enough jobs, or keep making loose jobs is not un answer. It looks like it might be getting worse and worse.
Outsourcing has become a predominant issue among many domesticated American companies. Unlike the popular opinion which supports outsourcing, transferring American work to foreign countries have serious lasting consequences on the American economy. High unemployment is one of the major contributions that arises from sending manufacturing and labor jobs overseas. The lack of available work has a slippery slope effect on many other occurring problems that Americans face today. With less available work opportunities, many foreign students that complete their graduate coursework often return to their home country, applying their knowledge learned from with the United States. As a result, there is less of a potential employee pool to choose from in a tight market. Outsourcing is popular with American business due to many benefits such as lower wages, low regulatory costs, tax benefits,
Outsourcing has been around for many years. In this paper I will discuss some of the history of outsourcing, the goods things about outsourcing, and the bad things about outsourcing.