Outsourcing - Where Did They All Go?

The firm keeps getting smaller. I went to the bathroom and the next minute the sales force is gone, when I get back from lunch the human resource department has disappeared. A little confused I went to my manager and asked where everyone went. With the usual puff on his cigar he said, They all went home and you can now dial 1-800-inI-ndia for our human resource and marketing department. Unable to sleep I sat and watched CNN and learned that nearly 340,000 to 500,000 jobs have been lost since 2000.

American jobs are subject to outsourcing due to many reasons of which labor costs are only one. Both small and large firms might consider outsourcing for many reasons. In a highly competitive global environment outsourcing has taken more of a center stage for the middle class struggling to maintain their position. The following reasons are why some companies may consider outsourcing:

1.) Large firms want to cut costs. In many cases the cost of benefits, wages and lawsuits make the business environment difficult. By moving these jobs overseas or by utilizing another firm costs are reduced because these workers do not have medical benefits, get paid a fraction of what Americans do and often work longer hours.

2.) Companies may also want to focus more on core business strategies. For example, when a company producing widgets is spending too much of their time on non core functions they may consider outsourcing. By doing so, they have a better opportunity to increase the overall functioning and efficiency of their core operations.

3.) Lack of qualified skill within a firm/company will create a need for outsourcing. When a company is opening up a new branch of operations or has lost skillful members they may consider outsourcing versus hiring full-time employees.

Simply because there are reasons for outsourcing doesnt mean that there isnt counter reasons why a company would not want to outsource. Outsourcing, or placing part of your business function with another company, is not always possible or desirable for many companies. Indeed problems often arise when outsourcing happens. The reasons why a company would not want to outsource are as follows:

1.) Hidden Cost. Many times there are additional fees, peripheral expenditures and customer complaints that simply make outsourcing undesirable.

2.) Quality control. When another company is doing part of your work you can not be sure that they will have the same quality standards. For example, if your business thrives off of its customer service and products any reduction in quality standards can damage your business objectives.

Outsourcing is here to stay but it may not be as big of a problem as it was in the past. Many companies are learning that outsourcing doesnt solve their problems but adds to them. Therefore they have elected to bring these aspects back in-house in order to maintain quality and customer satisfaction. It doesnt appear that anytime in the near future we will all have to move to India but please remember that if you come back from the bathroom and the human resource department is missing it is more likely that they are eating lunch than outsourced.

Murad Ali is a two time published author, labor relations manager, Ph.D. student who runs the New Business World Blog at http://thenewbusinessworld.blogspot.com.

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