Outsourcing and Global Impact of Outsourcing
Outsourcing affects every part of the business whether it be Sales, supply chain, logistics, human resource development or managed print service. If outsourcing is managed effectively it can result in high profits, low cost of labor and better quality of work. But on the other hand if there is mismanagement in outsourcing the results will be devastating in the form of all workers losing their jobs, loss of investment and customer dissatisfaction.
When taking into consideration the global impact of outsourcing, it has its prose and cons. The advantages are usually enjoyed by the country to which the business processes are outsourced. A few of the pros of Global Outsourcing are as under:
• Global outsourcing can easily save cost and resultantly save the company by outsourcing the work to poor nations where the labor is inexpensive like India, Pakistan, Philippines and China.
• Secondly Global outsourcing can provide with diversity in labor both on intellectual and craftsman ship levels. India and China are a perfect example of it, the former producing 870,000 IT graduates a year and the later mastering the art of reverse engineering and producing goods at a very low cost.
• When a company outsources to an under developed or developing country it brings foreign investment into that respective country. Which helps in accelerating the economic process of the poor country by creating a multiplier effect, i.e., the money that is brought into the economy as a result of outsourcing is spent on local goods and services.
• Outsourcing also helps in increasing the living standards of the poor country. Though the labor is cheap as compared to the home country but is better in comparison to the country outsourced.
• And last but not the least is the moral impact of global outsourcing. Outsourcing helps in closing the gap between richest and the poorest nations, consequently bringing world peace and prosperity.
Global outsourcing in recent times has shown some disadvantages as well. And the country on the suffering end is mainly the one that outsources its business processes. A few of the ways in which business process outsourcing proves to be disadvantageous are as follows:
• If the process of outsourcing is not managed effectively the result would be every one losing their jobs both in parent company and in the BPO. Because an ineffective outsource would result in loss of time and money, which results in lowering of profit and consequently downsizing.
• Outsourcing can also result in misrepresentation of the parent company. If the BPO does not comply with the quality standards due to incompetent work force the whole process would serve as a detonator for parent company and demolish its brand image.
• Political risk is also one of the major cons of global outsourcing. As the countries being outsourced are mainly under developed countries like India, Pakistan, Bangladesh and Sirilanka; so there is a high risk factor of political instability. Political instability influences the quality and timely completion of projects, which if not achieved makes the whole objective of outsourcing useless.
• The greatest disadvantage of Global outsourcing is the loss of intellectual property rights. A person developing software for companies like Google, Microsoft or Apple has no intellectual right over the software he/she develops, Instead whole credit goes to the parent company. In this way the inventor or developer is deprived of the rights of his/her creation. This is complete injustice morally and sheer exploitation economically.
In a nutshell we can conclude that outsourcing impacts globally in both positive and negative manner. It all depends on the how the process is managed, if handled badly outsourcing can damage the corporate image, weaken its brand and result in low quality of goods and services. But on the other hand if the process is managed efficiently it could result in saving a corporation from sinking and making it stand again on its own feet.