There has been much news about global outsourcing recently, and for good reason. The highly controversial topic is the source of ire for many out of work UK, US, Canadian citizens and more. However, on the other side of the coin, many believe that global outsourcing is a major source of business and economic growth. Never a clear cut argument to assess, a quick comparison of the topic's pros and cons will shed light on whether it is a solid choice for your company or individual needs.
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Global outsourcing fundamentals
In most circles, global outsourcing refers to the practice of hiring workers from other countries to fill positions that might otherwise be completed by workers that are national citizens of the home country. This is a very common practice in telecommunications, where foreign workers from second or third world countries are often hired over national recruits to cut costs. However, while the move can help reduce expenses on a short term basis, there are many long term drawbacks that can have negative effects of business as well.
Incentives for global outsourcing
The biggest incentive for outsourcing workers is to cut costs. As the average wages for workers in countries like India, China and Pakistan are lower, it is cheaper for companies to pay these foreign employees at their national rates than to pay citizens from home at their average national wage. In addition, many see global outsourcing as the next step in business as our markets rapidly become more international. Many believe that the practice can put businesses at the forefront of emerging markets, resources and industries.
Capitalism, free trade and opportunities
Many supporters of global outsourcing also agree that finding workers who are similarly qualified at cheaper costs is the right of any industry in the free market. They also argue that it is among one of the basic principles at the core of capitalism. There is a lot of evidence that suggests that global outsourcing can also help the economy in many ways. Some say that investing in workers in countries that have economic ties with big business, can improve trade and relations, and in turn, these improved relations can increase profits at home. This increase in profits then, is said to help create more opportunities and budgets for workers within the country in the long run.
Many believe, especially in a struggling economy, that the jobs of a country should stay within the country. The slogan "keep our jobs at home" expresses this sentiment deeply, and is commonly touted in the United States where unemployment rates have been on the rise. Some governments prevent businesses from hiring foreign workers unless they are equally or more qualified than candidates from within the home country. Companies that hire masses of outsourced workers receive criticism when there are more qualified candidates seeking the same positions from within the country. Companies that rely on outsourcing or companies that do not follow the proper protocol when outsourcing, run the risk of a backlash not only from their own workers, customers and press, but also from their home governments.
Quality control controversy
Many opponents of global outsourcing argue that the skills of outsourced workers from second or third world countries are not on a par with those of first world countries, citing differing education and work standards as a basis. Some dispute that while companies may get cheaper prices, they lose out on quality and, in effect, the long term loyalty of customers.
The final descision
There is no clear answer on whether global outsourcing is right or wrong. However, the reality of the matter is that it is something that continues to grow in many first world nations across the globe. Whether it leads to better business, low national employment or a flourishing economy is a debate that has been raging on for decades. One thing that remains clear, however, is that you must do extensive research and careful analysis if you are going to choose one side over the other.
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