Offshore Outsourcing - The Good, Bad, and Ugly - Essay Example

?Offshore Outsourcing: The Good, Bad and Ugly The current times have led to a change in how everyone is doing business. An alternative that corporations have moved into for globalization and with the necessary services required for functioning is offshore outsourcing. The tactic has allowed businesses to gain a different approach to the needed services for the company while offering global growth and savings in revenue. While the tactic has led to strategic planning and the implementation of growth within companies, there are also controversies surrounding offshore outsourcing. The changes in recent years have led to questions of whether the strategy should continue or if policies and new controls should become implemented in the global environment that many are now a part of. Why Use Outsourcing? The growth of offshore outsourcing has taken place over recent years for a variety of reasons. Corporations have used this as a main strategy to assist with the growth of companies and to offer new approaches to the human resources in various departments. The main reasons that companies are attracted to this begin with low labor costs. The human resource expectations are continuing to grow with technologies and advancements in corporations. Low labor costs allow corporations to continue to expand the operations that are associated with the company without paying the growing costs that are in the developed country. This is combined with benefits in finding a variety of skills and human resources that would not be available in other countries. Most in developing countries have a variety of skills as well as a work ethic that is based on offering the most conducive solutions to companies. By finding the right areas for training and development while looking into human resources at a lower cost, corporations are able to benefit with their business while continuing to grow in prospects for their company1. The ability to combine cost effective solutions and human resources are only two of a variety of factors that add into the strategy of offshore outsourcing. The popularity of outsourcing to other countries has also grown in recent years because of the theories of globalization that are associated with outsourcing. This is based on the ideologies of strategic management theory that are associated with outsourcing. This states that a business will be able to manage the offshore operations easily by opening various management components with the business. This makes it easier for the corporation to move into the region while establishing both offices and outlets that connect to those in the company. By doing this, companies are able to grow their human resources as well as the growth of the company in terms of getting noticed by those in the region. This allows the company to develop more consumers and to identify target markets overseas. The recognition of the company into overseas development then helps with the expansion of a business both in terms of human resources and consumption from the globalization that is building. In recent years, this has become an important component, as most corporations have the desire to become multinational and to create the needed approach to their expanding their business into offshore operations2. How Service Providers Favor Businesses There is a difference between the trade of goods, as opposed to services that come from offshore outsourcing. This is essential for international trade because of what is offered in terms of training and development and how this affects the corporation. The products offered are usually established by a corporation that already has established a system and which requires the manufacturing of specific products. However, services require human resources and the establishment of professionals within the arena. This means that training and development needs to be offered in the region. This also means that resources need to be provided to those in the region. The transitions which occur are similar to the training and development required within a country. The goal when finding services is to find cost effective measures for those qualified to offer the services. This first means that the company needs to find individuals that already have the knowledge behind specific services. If there is required training, then the cost effective solution is to have solutions that offer savings in the training and development. By having overseas functions that don’t require as much pay, there is the ability to create cost effective training and development to those interested in the services. Combining this with human resources that are more knowledgeable in a given area provides different alternatives in lowering the risk for the services offered within a corporation3. Another component that is applied to services is the basis of partnership that is established. With products, there is a focus on production that is required to finish materials and to place them in a store. However, the services offered require corporations to become proactive in the services that are offered and needed for a corporation. The partnerships which grow from this are inclusive of consulting, training and other formats that the corporation needs to establish a stronger presence within a given region. In various models, this offers corporations a different approach to connecting with various countries and the human resources available. As partnerships are established, a different economic and political establishment is required. This allows corporations to connect to the given company and to create an alternative approach to the establishment of the international trade. For corporations, the partnership becomes important not only in building human resources but also in establishing a strong reputation within a given region and while offering the services both inside the country and in relation to countries that are using the services4. The Controversy of Outsourcing The complexity which is associated with outsourcing has led to a variety of roles that have been established to monitor the way in which services are provided or expected from corporations. The first approach is through non – governmental systems. These are provided by the nation states and have authority over the corporations and what is offered, specifically to offer fair trade that falls under the conditions of the country. The main approach with nongovernmental systems is to monitor the services which are offered and the way in which human resources are used for the system. This is combined with labor standards that are expected to be withheld by those in a given country. Limits to the work time frame, services offered and expectations of individuals working for a corporation are some of the areas monitored by corporations. This is followed by the necessary methods which are based on the requirements of services which are offered. Many of the organizations focus on specific types of services and the requirements which are given by corporations. This is done to offer fair trade between individuals while creating a different approach to the consistency in labor standards and payment offered by corporations5. The governmental systems which combine with this include basic options for fair trade and associations with the global environment created. Regulations with finances, policies and the partnerships created for services are looked into with the international trade which occurs. An example of a body which takes this approach is the World Trade Organization (WTO). The approach taken is to protect those who are offering services in terms of financial alternatives and the labor which is provided. Policies and provisions are made to ensure that the countries outsourcing the services are able to have fair agreement for specific services offered. This is combined with expectations that each corporation must follow to create the right approach to the services. Negotiations, mediation and other components are offered if there are issues which arise. This leads to the monitoring of policies and how this affects the corporations or those offering the services. The goal is to monitor and maintain the services which are offered while keeping a sense of fair trade between the corporation and the service providers that are within a given country6. Is It for the Good? The various components that create offshore services lead to several positive and negative outcomes with corporations working in this arena. The main advantage with offshore outsourcing comes with the strategic implementation that occurs. The strategy is one which leads to a variety of human resources being available from developing countries, all which are able to maintain and assist with the growth of a corporation. This is followed with the cost – effective solutions that are a part of outsourcing. The average savings in a corporation are at 40%, leading to a large reduction in the human resources which are used while having the same services available overseas. Even though there is training and development required, there is the ability to change the total costs of the company and to reduce the amount that is associated with the services that are required to those working in an overseas area7. The positive options for the internal environment of a corporation are followed by the changes in the external environment that help with the growth of a business. As a business grows overseas, there is the ability to grow into intercultural capabilities. This makes it easier to negotiate and partner with those who are in different regions of the world. When the partnerships are developed in terms of services, a sense of cultural intelligence is created and leads to a sense of success with those who are creating the services. If a business decides to move an office or other location overseas, then the partnerships can easily extend, specifically with the cultural knowledge which has been established. This assists not only with the development of a corporation but also creates a specific link to the political and economic regions of a developing country. For a corporation, this provides more opportunities to be made available while creating a stronger presence to those who are looking at the implementation of a business in an overseas region8. While the cost effective solutions and growth of globalization are known positive effects for corporations and society, there are also negative outcomes of the growth which has occurred. For various locations, the outsourcing takes place because it is a developing country and doesn’t have the necessary resources for internal growth. Those who are providing the services are then adding into the growth and development of developed countries, while causing the internal structure of their own nation to remain without the correct alternative for specific needs. The individuals providing the services remain at the same lower level of payment for the labor which is offered. Corporations are able to make a larger profit and take the extra money back into the developed country. This leads to those in the developing nations without resources and solutions, while causing a capitalist structure to effect the performance and development that has occurred. The problem then becomes one based on the gap between the corporate gain and the suppliers that offer services and skills but don’t receive the outcome for the own nation which they are working in9. The perspective of outsourcing from this ideology is followed by the effects which are based on firm performance. A large number of individuals in society are resisting the offshore approach that has taken place. The viewpoints include ideologies that state that jobs are being taken away from home countries. Many also believe that the quality and the effectiveness from the services are compromised. This is specific to not understanding the needs of the country or the cultural affiliations that are associated with this. The risk that is associated with outsourcing then comes from those who resist the global perspective of outsourcing in society and culture. This leads to corporations taking risks based on the trends and changes in society as well as how this links to the growth and implementation of services which may be offered within a specific arena. The risk is one which expands into cultural differences, perspectives on outsourcing and the trends and changes in terms of politics and economy that are continuing to lead different ideologies within society10. When looking at the various perspectives of offshore outsourcing of services, it can be seen that it is in an infancy stage and can continue to evolve. The positive aspects outweigh the negative alternatives, specifically because of strategic implementation and controls associated with outsourcing. However, the negative concepts can turn into threats and potential harm for a corporation if the controls and correct measures aren’t taken within a corporation. The approach which each business needs to have in terms of offshore outsourcing is based on implementation of the correct programs. Training and development, compliance with policies and controls and making sure that the performance is similar to the standards expected in every region are all strategies which need to be placed with the services offered. By doing this, there is the ability to create a stronger set of human resources within a given region while continuing to work toward the globalization that is a part of the area. The result is the ability to work toward new tactics that assist with the movement toward globalization and the opportunities which are continuing to arise for businesses that are considering the outsourcing of services to offshore areas. 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