Overseas Outsourcing - Coursework Example

Human Resource Management Outsourcing Contracting out of business practices to a third part firm is known as outsourcing. The outsourcing business process is very much common now-a-days rather than staffing it internally. “Outsourcing” the term became popular in US in the early years of 21st century. Outsourcing includes transferring of assets and employees from one organization to another. The meaning of outsourcing includes both domestic and international contracting. Moreover, relocating a business process to another nation is known as outsourcing. Operational cost reduction from lower international employee rates is a huge motivation factor for outsourcing. Facts about overseas outsourcing The current national discussion about the employment practices in foreign countries of the private equity firms and organizations in US; features two phrases. These are outsourcing and offshoring. According to the people of US, these two phrases are interchangeable and referring to excruciating loss of jobs in US. Ongoing debate on Overseas Outsourcing The national ongoing debate is overseas outsourcing is a good US business strategy or not? In this present era of globalization in developed economy like US, major of the jobs are now outsourced to other nations. Data and information about US department of commerce showed that the multinational companies in US with strong brand name and image used to recruit a fifth of all American employees. In the year 2000 major of the MNCs in US has reduced their work forces by 2.9 million. On the other hand they generated employment in foreign countries by 2.4 million. Basis on a report manufacturing employment in US has collapsed from 19.5 million employees to 11.5 million employees within the time period of 30 years. It seems interesting that near about 8 million employees have lost their jobs in these 30 years. Moreover, the manufacturing plants also have declined drastically in the last decade. Since 1998 almost 51,000 manufacturing plants got collapsed. These middle class jobs were actually the driving force of the strong economy of US. The losses have significantly damaged the communities across the countries. After conducting several surveys, it has been identified that savings of labor cost is one of the key drivers leading to overseas outsourcing. But according to the Hackett Group’s research, the cost gap between China and US has reduced by about 50% since last 10 years. Moreover, it is expected that the figure will come down to 16% by the end of 2013. Only 4% of large MNCs had the future plans regarding the relocation of jobs from the foreign countries to US. The organizations, who make the investments for the foreign market place and tend to shift offices, plants, jobs, HR services to the foreign countries has to invest huge initial capital comparing to the setting up every necessary things within US. Advantages Providing services or manufacturing works in the foreign countries known as outsourcing. It is a typical business process that reduces the cost of business operation in a country. This can be a hard sell in the best of times. It is become more challenging when jobs are tough to find in US. Moreover, it is painful to think that the jobs are being shipped in foreign countries. If the Americans kept the work at home, then it is feasible that they could make an indentation in unemployment. There are at least two situations with such reasoning. In US major of the jobs are linked to exporting. It is a part of the principle of President Barack Obama’s goal. The vision of the President of USA is to double the exports in US in next five years. US are a potential place to construct passenger aircrafts, design computer software, manufacture sophisticated machine tools, or provide adequate business services. After China and Germany; US are the third largest exporter in the competitive global market. US are the expensive place to assemble electronic goods or make T-shirts. If the US were to avert from open trade and block outsourcing; other developing or developed countries may avoid the purchasing of US based products and services. This may directly or indirectly harm the US economy as it would cost huge number of American jobs. The link between jobs and outsourcing is complex enough. The capital or money saved from the outsourcing practices can be used in order to create other American jobs. For an example, a start-up company may get success if the organization can use a reasonably priced call centers in foreign countries in order to provide effective customer service. Customer support is slowly and gradually becoming the success mantra for the multinational companies. Therefore, block of outsourcing may create huge unemployment in US. As US are the developed economy therefore, US currency is stronger than other developing countries from where it outsources services. For this reason leading companies in US outsource services from other developing and under developed countries. By this way the businesses become more cost effective in terms of lower wage rate. Disadvantages Outsourcing may sound like a good deal for the businesses in US, but in terms of business practices it has several negative impacts on US economy. When an organization outsources Payroll, HR and recruitment services; it may raise the risks of exposing secret information and data to a third party. When employees lose their jobs to outsourcing, they tend to finish up in new jobs with significantly lower pay, and perhaps a life of lower quality. Outsourcing reduces the choice of jobs for the people of US. As a result they are losing a large deal of possible know-how. The people of young generation are seeking training in skilled manufacturing and certain technical careers as the particular jobs are moving in foreign countries from US. Generally outsourcing provides downward pressure on the wages of US (Hira & Hira, 103). The employees in US who are in competition with the other employees in low-wage countries; may face several difficulties in order to buy a home, save for children’s education, or save for retirement. Therefore, it is feasible that wages for many employees in US may not support middle-class lives for a longer period of time. Outsourcing has increased the trade deficit of US, such as the gap between how much they import comparing to export which is really bad for country’s economy. Increase of trade deficit of US has forced them to borrow to cover the difference of more buying than selling, just like any other debt (Brezina, 55). In this era, the price of crude oil is increasing day by day. The price of goods, shipping costs and cost of aircraft is rapidly increasing along with the oil price. Therefore, it can be suggest that overseas outsourcing is not a good thing for a business process. Moreover, production and separating innovation is inefficient due to this. When the manufacturing process is closer to home, it is very much simple and easy to control the product quality and inventories. Overseas outsourcing is not predictable. An adequate strategy in order to support manufacturing business can bring success for the manufacturing firms of US (Gold, 10). If the manufacturing organizations cut down the incentives to outsource by changing the trade policies and taxes, US can keep and offer more number of jobs to their people. Work Cited Brezina, Corona. How Imports and Exports Work. New York: The Rosen Publishing Group, 2011. Print. Gold, Tandy. Outsourcing Software Development Offshore. Florida: CRC Press, 2004. Print. Hira, and Anil Hira. Outsourcing America. New York: AMACOM, 2005. Print. Read More