Outsourcing Jobs to Foreign Countries
Due to the lack of employment in foreign countries, companies that outsource work overseas are not only beneficial to themselves but also to the service providers being employed. The initial benefit that catches the public’s eye from outsourcing is a cost reduction on the company’s part. But that is not the only benefit from outsourcing or even the key benefit that causes companies to outsource, on the other hand, outsourcing has its disadvantages as well. Outsourcing, like every developing idea being implemented into our economy, has its pitfalls and drawbacks such as staff cuts and information leaks, there are also cases of breach of contract. Despite all the advantages and disadvantages of outsourcing, it is a wheel in motion and is becoming more than just a question of whether or not a company will outsource but it is a question of how much or how little of the company’s work will be outsourced offshore. This having been said; let us discuss the benefits and pitfalls of offshore outsourcing.
Companies not only benefit from cost reductions overseas or the ability of the company to specialize in one area of expertise but also outsourcing certain work lets designers and engineers focus on more important tasks. To illustrate, “In Calcutta, India, a team of engineers is designing bottle caps ... Back home in Indiana, a team of engineers that used to design the same bottle caps now focuses on more value-added engineering work since some of their design responsibilities have been taken away.” (Katz, J., 2006). Outsourcing from the start was initiated to reduce non-core tasks, such as inventory management and logistics from the already full list of tasks appointed to company heads, “not an ...
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...g. There is an undeniable fact here, that outsourcing is no longer just a strategy to succeed but a tactic used in everyday business.
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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 ...
In many cases outsourcing has proven to be beneficial for businesses. It can help a business’s management by allowing executives to focus on the core structure of the firm rather than every specific element. Production, manufacturing, or additional servic...
Since the concept of outsourcing was introduced it has been a subject of debate between politicians and citizens of the United States. Remarkably, it was the United States who supported outsourcing and now it is the United States that feels its economic progress is being threatened by outsourcing. One may argue that the financial situations that existed two decades earlier are not the same as they are today, thus the change of time, business priorities of economies have also changed.
The outsourcing trend continues to eat up the value chain from blue-collar jobs to white collar jobs3. The software industry is experiencing an outsourcing trend to countries such as China and most significantly to India. The proliferation of the Internet has opened easier access to information and collaborative environments. Previously communication costs and access to mind power was limited. The Internet made communication costs virtually free and collaboration with groups around the makes software engineering and collaboration tasks easier. In additional, liberalization of free markets across international lines has made it easier for companies to set up and outsource engineering tasks throughout the world. Business-process and software outsourcing rely on cheaper cost structure as found in East Asia with manufacturing4.
Kibbe, C. (2004). Outsourcing” the good, the bad, and the inevitable. New Hampshire Business Review, 26(14), 1A.
Other researchers have identified several outsourcing issues, trends and strategies that companies take in establishing and effectively managing their outsourcing activities (Sinderman 1995; Carney 1997). The trend is for outsourcing relationships to function more as partnerships. Outsourcing providers are taking increasing responsibility in realms that have traditionally remained in-house, such as corporate strategy, information management, business investment, and internal quality initiatives (Sinderman 1995; Carne...
Companies outsource for many different reasons. Perhaps the best know and least understood of those is to save money. Most people probably think that it is just greedy rich CEO?s trying to get richer. While in some cases this may be true, more frequently it can be in response to an overall downturn in the economy. Companies trying to maintain in the hard times are forced with trying to find ways to save money. According to Julekha Dash in her article ?Cost cutting may spur IT deals? on computerworld.com ?The cooling economy may prompt firms to outsource more IT or cost cutting reasons.? In the same article they stated that in a pole given to 150 American and European companies 39% of the companies listed saving money as there primary reason for outsourcing. Saving money was the number one answer given.
In light of recent growth of domestic and foreign countries outsourcing and off shoring over seas, companies been taken advantage of the cheap labor cost for outsourcing and off shoring manufacturing. Competitive business investing in domestic and foreign manufacturing have affects every part of the business industries from design, software development, finances and logistic management, i.e., customer and sales. Nevertheless, outsourcing been praised by businesses for outcomes of cost-effectiveness, efficient, productive and strategic, but damned as malicious, because of companies’ greediness, detrimental, and brutal in the public eyes.
Kibbe, C. (2004, 07 09). Outsourcing: the good, the bad and the inevitable. New Hampshire Business Review, pp. 1A-21A.
Throughout history hundreds of jobs have been outsourced to other countries for the benefit of cheap labor. American outsourcing has been blamed for the constant lack of American jobs causing a controversy between the labor force and businesses that benefit from outsourcing. In the introduction of, Does Outsourcing Harm America?, outsourcing is defined as a “business practice in which a company hires service providers, usually located outside of the country, to do work that the company believes can be performed more efficiently and less expensively by these outside contractors” (7). Although many people believe that outsourcing is a recent practice in business, this is not true. Outsourcing has been around since the colonial times, the production of covered-wagon covers were outsourced to Scotland while the raw materials for the product were imported from India. During the 1970s computer companies began outsourcing their payroll applications to outside providers. Outsourcing became a well-recognized practice during the 1980s due to the high demand of IT workers. Although there was a high demand for IT workers, large corporations viewed the IT workers as an expensive labor force. Therefore many corporations led their demands elsewhere for the sole purpose of lowering their expenses. Outsourcing is not just used for IT solutions; major companies are embracing the benefits of outsourcing, companies such as Apple, Wal-Mart, Boeing, Sears, Disney, etc. US corporations have expanded their needs for outsourcing from just IT departments. Auto parts, cell phone parts, airplane parts, tax return preparations, and clothing manufacturing have all been deemed as jobs that can be produced at a lower cost rate outside of the US.
It has become evident that countries must make these changes in order to be able to compete in the worldwide economy. In addition to the technological improvements, occupational changes are imperative to the contribution of a flat world. The term outsourcing involves the sharing of management control and or decision making to an outside entity. It is most often heard when a company outsources its workforce. It usually occurs when management decides they can hire cheaper and more cost efficient labor often in another part of the world. This is why much of the articles of clothing we wear, say “made in China” or “made in Taiwan.” A company based in the United States can pay workers oversees a much lower rate than they can in America. This doesn’t sound like much, but outsourcing in an age of an ever improving communication system is really bringing the world closer together.
Canadian companies are beginning to outsource more and more jobs outside of our borders to foreign countries. Outsourcing out of the country comes with a lot of benefits and risks for both the companies and the economy. There are a multitude of different jobs and services that can be outsourced; a few of the main ones include IT services, technical and customer support services, manufacturing, and legal services. Even though outsourcing saves companies a lot of money and makes it easier to keep your business running, it still poses a very large treat to our economy since it leaves Canadian citizens out of the job and instead gives them away to foreigners. Even with this problem however, I still strongly believe that outsourcing to other countries outside of Canada is a wise business decision and should be allowed to continue. I will demonstrate this belief by contrasting the advantages and disadvantages of outsourcing outside of Canada.
For my topic I chose outsourcing. Outsourcing has positive and negative impacts on the global business world. When thinking about outsourcing there are quite a few aspects that have many sides. Outsourcing has been known all over the world. In reviewing outsourcing you must take into consideration every single detail that is involved into making outsourcing what it has become today. As you continue to read this paper you will learn how outsourcing has changed lives for better and for worse. Outsourcing has been a topic that has also made some quite skeptical. The question you might be wondering to answer is why outsourcing?
12 THIBODEAU,PATRICK "Outsourcing growth predicted, but impact on workers may be uneven" IDG.Net , 2003, June 8 2003,
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.