By Gregory Taillon
Outsourcing has become a major trend in today’s world of business. Despite the anti-outsourcing rhetoric, businesses must remain profitable in today’s highly competitive global economic environment.
CNN’s Lou Dobbs identified over 300 American corporations that outsource to remain profitable in today’s global economies. Perhaps you work for a company that outsources. Even if you don't, you can bet that your competition does. This may be why your competition is ahead of the game.
Forrester Research predicts 3.3 million jobs will be outsourced over the next 15 years. The number of outsourced jobs increased from 6.5 million in 1983 to over 10 million total jobs today.
Why do companies outsource?
- Outsourcing is an economic savior for many corporations.
- Corporate policy and boardroom debate support outsourcing.
- Students overseas are highly skilled and technologically literate.
Those firms that expand their operations into other countries are reaping rewards and meeting their bottom line goals. Outsourcing allows American companies to streamline and remain profitable. But key questions remain:
- Can companies outsource without shifting their whole future abroad?
- Is outsourcing a viable option for your organization?
Consider the different sides of the debate:
Opponents of outsourcing see it as a new type of homeland "insecurity" that harms America through the loss of jobs. The shift of traditionally white collar technology to blue collar work has sounded alarms for American voters, and outsourcing was one of the most hotly debated issues in the recent Presidential election. The Bush administration had been criticized for "exporting our jobs overseas." But in America, it has never been the government’s position to directly dictate overseas labor practices to private corporations. Additionally, corporations have been aggressively doing business overseas since the late 1970s.
Proponents of outsourcing refer to it as "globalization." They point out that one benefit of outsourcing is "insourcing." Just as U.S. firms outsource positions, foreign firms outsource positions to the United States. Foreign automobile manufacturers, for example, can't overlook the fact that the United States is their world’s largest consumer. Therefore, many jobs will remain or be created within our borders in the future. The number of "insourced jobs" has increased from 2.5 million jobs in 1983 to over 6.5 million jobs today.
The ability to conduct business globally increases the customer base immensely. Tougher taxation on corporations by the United States government would have little effect, considering the amount of labor savings versus the amount of increased taxation. Outsourcing, despite higher taxation, is clearly a benefit to these corporations.
A majority of all Americans, in fact, support outsourcing. Americans love low prices, as demonstrated by the popularity of Wal-Mart. The American public enjoys the benefits of globalization by shopping at discount stores stocked with foreign goods. Americans enjoy driving foreign cars, drinking imported coffee, wearing imported clothes, buying Chinese toys, using European-produced cell phones and playing Vietnamese and Korean electronics and musical instruments. All of these goods are available at low prices never imagined in the past.
Essentially, globalization is a "win-win" situation for all countries involved. Americans get cheaper products while supporting growth in emerging countries, and companies remain profitable in the global economy.
Is Outsourcing Appropriate for Your Organization?
Outsourcing is appropriate for many firms and organizations recovering from the weakened economy. From a purely economic prospective, historically, if one country is better at producing a product or commodity, and the product is in demand, we have imported that product. Similarly, if a foreign country is better at providing skilled labor, it makes sense to export work to that labor force.
Outsourcing now crosses over into many business environments, including engineering and technology, accounting, call centers, word processing, database management, publishing and printing and legal and administration. Labor-intensive administrative tasks, bookkeeping, legal transcription, proofreading and system design jobs are likely candidates for overseas workers.
The world’s leading and most respected engineering school is the India Institute of Technology, where 3,000 of the world’s top engineers enroll annually. India and Asia have been brain-drained for years, as engineers and scientists from abroad built the most profitable corporations in technology. So it makes sense to set up technology operations overseas, where a highly motivated and educated workforce waits for positions.
Additionally, the Internet has provided a global link between end consumers and retailers who are continents apart. Advances in digital network transmission and telecommunications have allowed network and telephone calls to be easily routed to other countries. India is the leader for call center operations, but the Philippines and South Africa are other emerging areas where highly skilled English-speaking workers are available at low cost. Spanish-speaking labor is available in Mexico and South America for companies with Spanish-speaking clients.
How Can You Outsource Jobs in Your Organization?
Outsourcing is a politically sensitive issue and managers must be prepared for a short-term backlash whenever domestic workers are replaced. Whenever possible, provide an option to "displace," rather than replace, key domestic staff positions. Many technology workers have been instructed to implement the demeaning task of training their replacements in the home office or overseas. To avoid this situation, hire a consultant who can advise you about any applicable employment and intellectual property laws.
You can hire overseas headhunters and business consultants to set up initial operations. Legal jobs, for example, can utilize temp services based in India. The Indian companies have thousands of paralegal staff available, so corporate law clients don't have to hire workers.
If you do decide to outsource, be sure that your customers' personal data are protected, because customer satisfaction is the key to a seamless experience with an outsourced employee. This may require a considerable initial investment for training workers overseas and security protection for your database.
Outsourcing for the Future
For many firms, outsourcing is a viable option for successfully competing in a global economy. Consider the pros and cons for your organization. As our world economy continues to evolve, you may find that outsourcing can enable your firm to reach new heights. Whatever your view of outsourcing is right now, keep this option open and you won't run out of options later on.
As long as Americans continue to want more products and services for lower prices, outsourcing and competing with foreign workers will remain the new business reality.
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Author Bio: Gregory Taillon is the author of the new book, Remote Control Wars: The Media Battle for the Hearts and Minds of Our Youth. For more information, visit www.remotecontrolwars.com
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