subject: Outsourcing Jobs to Foreign Countries [print this page] Outsourcing Jobs to Foreign Countries Outsourcing Jobs to Foreign Countries
The world of business has been changing around us. Whether we have taken the time to notice or not, things have been and will continue to change as we move forward. I am referring to the idea of product outsourcing. Outsourcing is when a company decides to move their manufacturing or production plant to another country for work to be done at a lower cost. To some, it seems ridiculous, but to the owners of the company it makes perfect sense.
There are three reasons why companies' outsource: 1.) It is an economic savior for many corporations 2.) Corporate policy and boardroom debate supports outsourcing 3.) Students overseas are highly skilled and technologically literate (Taillon). These reasons for outsourcing allow a company to produce their product at a low cost and still be able to sell it for market value, thus increasing their profit by a larger margin. Forrester Research predicts 3.3 million jobs will be outsourced across the next 15 years (Taillon). That means that even more jobs here in the U.S. will be lost, and emerging countries will gain from it.
There is also a new type of outsourcing going on in the world. This new type of outsourcing is called business process outsourcing or BPO for short. BPO is when you hire a third party to perform the specific business aspects of your company. BPO typically covers back-office financial operations such as accounting, HR, supply chain, and call centers (Schwartz). IDC, a Framingham, Mass., research firm, predicts that BPO will grow at a compound annual rate of 10.9 percent (Gibson). With 382.5 billion in annual sales in 2004, global BPO will grow to 641.2 billion in 2009, according to IDC analysts (Gibson). That is almost half of the annual sales in 5 years. A study by McKinsey & Co. that was sponsored by Nasscom, an Indian outsourcing trade association, found that India has a large proportion of BPO talent, with 28 percent of the skilled BPO workers among 28 low-cost countries (Gibson). India also has the world's leading and most respected engineering school, the India Institute of Technology, where 3000 of the world's top engineer's enroll annually (Taillon). With this kind of information and reputation that India has for outsourcing and the quality at which they provide them, it is no wonder why companies choose to outsource. It makes sense to set up technology operations overseas where a highly motivated and educated workforce waits for positions (Taillon). Bill Frech, vice president of Capgemini's BPO practice, predicts that BPO will take precedence over, and ultimately, drive application outsourcing (Schwartz).
Although some do not agree with outsourcing jobs to other countries, progress is being made. Governance is still the No. 1 challenge against companies that outsource; however, the trend of outsourcing is not slowing (Schwartz). The number of "outsourced" jobs increased from 6.5 million in 1983 to over 10 million total jobs today (Taillon). Those who are against outsourcing, view it as taking jobs away from Americans and giving it to foreign countries. And that leaves them wondering why our own companies in our country would take away jobs from our own people? The feeling is that outsourcing is generating the company a greater profitability at the expense of our jobs. And the fact is that it is not the case.
One benefit of outsourcing is "in sourcing" (Taillon). Just as U.S. firms outsource positions, foreign firms outsource positions to the United States (Taillon). The number of "in-sourced" jobs has increased from 2.5 million jobs in 1983 to over 6.5 million jobs today (Taillon). The fact is that although we outsource a lot of our jobs, we also have a lot of jobs coming into us as well. We just do not realize it because we only see our own jobs going out to some other country. Believe it or not, a majority of all Americans support outsourcing (Taillon). We love low prices; we enjoy driving foreign cars, drinking imported coffee, wearing imported clothes, buying Chinese toys, using European cell phones, and playing Vietnamese and Korean made electronics and musical instruments (Taillon). We do all of these things, and they are all the product of outsourcing. Without outsourcing, we would not be able to acquire these items at the low cost we pay for them now. Although some may view outsourcing as bad for the United States, but the reality of it is that outsourcing creates in-sourcing in our country which generates jobs, and it also allows for goods and services to be bought at lower prices.
Works Cited
Gibson, Stan. "BPO: The next frontier." eWeek 23.12 (2006): 54. Business Source Premier. EBSCO. Web. 16 Nov. 2010.
Schwartz, Ephraim. "The New Outsourcing." InfoWorld 27.6 (2005): 10. Academic Search Complete. EBSCO. Web. 16 Nov. 2010.
Taillon, Gregory. "Out of Options: Is Outsourcing the Answer?." Accounting Today 18.20 (2004): SR-4-SR-5. Business Source Premier. EBSCO. Web. 16 Nov. 2010.
