Paper Topic:

Outsourcing in America

Outsourcing in America

2007 Outsourcing in America

Introduction

In business , in to provide services or sell products at competitive rate , corporations are to cut unnecessary costs or to focus on core competences in to reduce the number of human resources and associated costs

Concerning the need to reduce costs coupled with the fierce competition in business , currently , enterprises are striving for finding the best solutions to increase revenue while keeping costs as low as possible While the matured technology can help enterprises to reach economy of scale , outsourcing of

employees (human resources ) can be the savior for companies to keep their fixed costs that incurred from employment and research to reach minimum level

Fortunately , in the Internet era where any documentations process can be sent out over the internet and job can be conducted via e-mail or instant messaging , outsourcing-typed employment model have proved to promote significant savings . Concerning the issue , this discusses benefits and impacts of outsourcing in the U .S

Outsourcing

Government Accountability Office (GAO ) says that Outsourcing ' of services refers to an organization 's purchase from other countries of services that it previously produced or purchased domestically , such as software programming or telephone call center (US Embassy , 2004 . Just like other business schemes , outsourcing also gives us advantages and disadvantages as following

Advantages of Outsourcing to U .S . Economy

In the U .S , the cost of labor has increased significantly . The situation has driven American enterprises , especially ones in information technology segments , to outsource the software development to a developing country like India . The reasons are obvious that the labor cost in India is much cheaper

It makes sense since in today 's economy , companies need to maintain a cost structure that is globally competitive given that requirement , we can easily guess how businesses will react . Ultimately , free market competition is the ruler of the day , and , while governments may introduce barriers that influence individual situations , there will be no stopping the offshore outsourcing trend

Moreover , McKinsey Co predicts that the Internet-enabled services (ITES ) market is likely to touch 142 billion in 2009 . There would be a net saving accounting for 390 billion from current cost of 532 billion for these services (Kurian , 2003 . U .S . can fulfill the net saving through off shoring to other country like India

Impacts of Outsourcing

While such incredible saving might be the concerns of American enterprises , Nasscom quoted Michel Janssen , founder and President Everest Group , that there is possibility that outsourcing have closed relation to the loss of jobs in the US

Some private researchers predict that outsourcing may eliminate 100 ,000 to 500 ,000 IT (information technology ) jobs within the next few years while others note that outsourcing can also generate benefits , such as lower prices , productivity improvements , and overall economic growth

Concerning the situation , Jackson (2005 ) sees that the outsourcing may lead to increasing import to the U .S . This makes sense while foreign investment is displacing jobs and domestic production , there are possibilities that...

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