BUS 401
MODULE 3 – CASE
OUTSOURCING
Outsourcing started in the manufacturing industry as a way to lower labor costs and shipping costs. By the 1970s, many consumer electronics were manufactured overseas and by the 1980s more businesses started to follow suit to keep costs manageable. According to Forrester Research, by 2015 3.3 million jobs and $136 billion in wages will move to India, China, Russia, Pakistan, Vietnam, et al (William Greene, 2006). While outsourcing has many advantages for companies that contract out some of their business functions, the job loss it creates in the US has caused many uncertainties for the US public and economy. While outsourcing may not be a short term solution and only benefits a company in the long term, there are both advantages and disadvantages to outsourcing.
Outsourcing has been around for a long time. Companies are always in search of ways to cut costs and customers will always want better service at cheaper rates. Outsourcing is one approach to provide these services at a rate everyone will be satisfied with. Global outsourcing has emerged because of increased technology, better communications, and competition. Some of the positive effects of outsourcing is it aids globalization, improves the standard of living in developing countries, and creates good job opportunities in those countries. Domestically, it creates innovative and low cost products, provides tax benefits for the company, and the company is able to concentrate on their core competencies which is critical for the company’s progress. While these advantages ar ...