Effects on the Host in Offshore Outsourcing

In this 8-minute video on Offshore Outsourcing as viewed by an academic, Professor Bhattacharya said one thing that struck me. We talk a lot about offshore outsourcing and how it has a positive effect on the companies that do employ this. We have broken down the good points of offshore outsourcing but exactly does it do the host country?

Prof. Bhattacharya wanted to talk about outsourcing in China when it comes to manufacturing but couldn't because of language and culture barriers. However he was able to give a brief overview about the leading host country in IT services, which is none other than India. In my opinion, growth has a possibility of being inhibited if host companies keep depending on outsourcing as a source of work. That's why I think it's good that India is actually developing their own ways and reaching out to other countries for their own brand of offshore outsourcing business functions.

As for hosts like China and the Philippines, we have yet to actually see them reverse their situation and develop their own methods to export to other countries but perhaps in time we will see call centers set up by the Philippines in areas other than their homeland and consequently giving jobs to other host countries.

Offshore IT Outsourcing: Everyone's Game

Contrary to what everyone thinks, not all IT jobs are losing to the offshore outsourcing trend. It has been a well known fact that India has been a power player in the whole offshoring business. With so many companies setting up call centers in India it seems that the jobs just keep on coming. However, that’s not entirely the case as more and more countries steps up to offshore outsourcing hype and takes advantage of its prominence. Apple withdrew its plans on India because it figured that there are more services that offer good quality with still lower costs.

That is one of the prime examples where the main logic of offshore outsourcing to cut costs doesn’t apply anymore. Suddenly, with the emergence of countries stepping up to the plate offering high quality service at an even lower cost the battle for offshore attention gets tougher. This makes me think though, just how low are these companies aiming for? The cost keeps going down and the quality seemingly keeps going up.

Offshore IT outsourcing has been a delicate subject for many Americans as they have been losing their jobs for cheaper labor overseas. Buildings used primarily for business in the US have slowly been converted to residential spaces because of more and more Americans losing their jobs to the offshore outsourcing trend. While this is happening, more and more residential spaces in countries like India and China are being converted to commercial spaces.

The situation seems to grow dim but aren’t we overreacting a little? People lose jobs and gain jobs on a regular basis. The only reason that offshore outsourcing is getting the spotlight is that the change and the number happened to be too big, too fast. But the rate of the sudden crash in employment doesn’t equate to underemployment. At least not yet. If the government wants to calm its citizens down, then they should determine which jobs are getting offshored, which jobs are staying and how to protect them. Probably more important than all this, is the creation of new job opportunities and greater compensation benefits. India is currently the number one offshore IT outsourcing player in the game but even India loses their IT jobs from client companies to greater competition. So nothing is absolute. It's everyone's game.

Offshoring, Outsourcing: 3 reasons why it's good for you

It's every businessman's goal to maximize profit using minimal cost. The first question starting entrepreneurs ask is "What do I get out of this?" In the ancient art of alchemy it has been said that in order to gain something you must offer something of equal value. However, when it comes to offshoring and outsourcing, you actually manage to get a whole lot while giving so little. Companies save millions of production cost by offshoring and outsourcing. This is particularly evident with the prominence of call centers in various countries like the Philippines, India, Australia and China.

Price goes down = Demand goes up

It's basic knowledge that the relationship between price and demand is almost completely inversely proportional. If all other things are taken to be in equal value then we can safely assume that as price decreases, the quantity demanded increases. Now where does offshoring and outsourcing come in? Let us remember the relationship between cost of production and price of commodity. If it takes less money for you to produce then it is possible to lower the price. If you outsource certain business functions, you cut down cost. You do the math from here.

Odd Jobs out, Great Jobs in

Along with the progress offshoring and outsourcing give, it won't exactly be a business venture without worry and risk now would it? What people worry about is that employees of these client companies will lose their jobs to relatively cheaper alternatives to labor cost. That is one way of looking at it. That's the easy way of looking at it. However, if you'd also look at another side of it, if a company moves call center jobs offshore, the way would be paved for more sophisticated jobs; jobs that require greater skill and qualifications. This in turn moves the education system and trains people to be more competent to qualify for higher-paying, more fulfilling jobs.

Business will focus on what really matters

Most of the jobs being outsourced by client companies are customer service jobs or tech support jobs. These business functions though still needed is at the bottom of the food chain and once you offshore this business function, you will have time to focus more on the things that do matter. Invest more time, money and effort on research or marketing.

In offshoring and outsourcing, good things keep coming. Outsourcing jobs to foreign countries may be one of the best ideas to come out. Call centers top the list. Inbound or outbound, these are jobs that developing countries strive for and the developed countries can easily dispense. It’s a win-win situation for both parties.