Outsourcing Effects

Source: Cyfuture
The Outsourcing market is estimated to grow tremendously in the coming few years with an increasing number of companies planning to outsource both low-end and high-end jobs to offshore destinations. Also the number of companies providing outsourcing services is on the rise, thus resulting in larger variety. Due to the fact that more and more companies are outsourcing, the risks are getting smaller as businesses have more experience and clearer objectives.

Outsourcing in the world today is seen as a strategic management option rather than just a cost cutting operation. It aids companies to achieve their business objectives through operational excellence and a better market position. In order for companies to focus on their core competencies, all companies today outsource one or more of their operations. In order to compete in the global economy companies need to focus their resources on their core operations.

Lately however, the concept of outsourcing has been criticized. The negative attitudes toward offshore outsourcing have been mostly discussed by parties in the US and UK, due to job losses in the mentioned countries. Some people in countries like the US, feel that outsourcing is threat to their economy. Outsourcing jobs to offshore destinations, is causing unemployment in the minds of some people.

On the other hand not only does outsourcing have benefits for the company it also has positive implications or effects on a larger level. Outsourcing will ensure that companies can pass the reduced costs to national consumers or for investors to reinvest. New revenues will be created as outsourcing to a foreign country will establish demand for the company’s national products, especially in high-tech products. Although some national jobs may be lost in the outsourcing process, other jobs will then be filled generating additional value for the economy.

Both negative and positive effects of outsourcing can be recognized. Positive effects of outsourcing can include concentration on core business areas, world-class technology at lower rates, skilled manpower at affordable prices, increased productivity, competitive advantage and tax benefits. Negative effects of outsourcing can be decreased quality, increase in time-to-market, poorer customer service, hidden costs, loss of control, unreliable vendors and negative long-term effects on business.