Research Paper_ Is there a Future of Outsourcing?

Is there a Future of Outsourcing?

In “Outsourcing impact on business, jobs and economies of wealthy and poor nations,” Patrick (n.d.), explains, “We need to take urgent action to reduce costs. If we don’t run our business efficiently, everyone could lose his or her jobs. People who have entrusted their life-savings to us (mainly pensioners), will go elsewhere” (para.24). In the 1990’s managers started to make dealing with newly formed service company, as a result, outsourcing starts to work inside out of the business and become one of important system of business. In those days, many companies made a profit. However, the situation is changed which companies realize little profit or cannot get any good results, lately, because there are too many problem from the outsourcing. The goal of business is making money, but companies do not pay much more than before. People who want to make good use of outsourcing in their companies have to know what the problems are from the applying outsourcing. Because of outsourcing, it is easy to make employees unsettled feeling and cause many problems from the managing supplier. Therefore, sometimes, there is impossibility to get any outcome

The American Heritage Dictionary defines outsourcing as "To send out (work, for example) to an outside provider or manufacturer in order to cut costs" (“outsourcing”). Outsourcing is similar to off shoring. Off shoring is defined by Webster's New Millennium Dictionary of English as the practice of moving business processes or services to another country, especially, overseas, to reduce costs (“off shoring”). These two words can be the same. Historically, outsourcing was not formally identified as a business strategy until 1989. In the 1990's managers started to make contracts with newly formed service companies (2006, para.2). Currently, companies are trying to make strategic partnerships with other companies. The controversy is the big business owners hurt America because of outsourcing but business owner still say they have to outsource in order to stay in business (2006, para.1). Businesses say the reason is they have to compete with other countries like China. Therefore, these companies had to downsize and many people lost their jobs. Every year, many jobs continue to leave America because of outsourcing. This argument by the business owners does not convince many people like Robby Spurlin, a senior at Appalachian State University. "The loss of the textile jobs in Surry County since NAFTA took effect is bad enough," Spurlin said. "But it gets worse when you think about the trickle-down effect on the entire community and more people having to live paycheck to paycheck" (2004, para.1).

Not everything about outsourcing is bad for American people. America has benefited from other countries outsourcing to the U.S. As the Wall Street Journal Reports "The balance of jobs we import from abroad greatly exceeds the jobs we export abroad. Every time a foreign company decides to build a plant or opens an office in the U.S. Americans are put to work to man these facilities" (n.d. para.3). This may possible be true for America overall, but sometimes a small community relies on a single large company to provide the community with its wealth. If the company leaves the community will be devastate. Outsourcing makes employees feel insecure. Outsourcing usually means a company will downsize because of company offshore to other country. There is no worse feeling than losing a job. Some research estimates that “3.3 million white-collar jobs will move overseas by 2015,” and also, according to projections, “the hardest hit sectors will be financial services and information technology" (2004, para.8). This information alone sounds bad but to make it worse, Hewlett-Packard chief Carly Fiorina (2004) said in a testimony in front of Congress "There is no job that is America's God-given right anymore" (para.2). A lot of employees are becoming more worried about job security. All this worry makes an employee feel uneasy and an uneasy employee is not very productive.

First, sometimes a company will not see any results from outsourcing. In fact, if a company is not careful, they can lose money. Frank Coyle, IT director at John Menzies Distribution, warned of the consequences of not using outsourcing selectively and intelligently. "The disasters occur, typically, when an accountant somewhere tries to make a name for them by convincing the board to outsource the whole department, thus, losing control of a critical business area. The problem then becomes one of trying to get the genie back into the bottle - not so easy," (2005, para.9). Therefore, a lot of time and thought needs to be spent deciding if outsourcing is the best choice for a company. In addition, there are many considerations such as geographical problems like language problems, accent problems, political instability, change in laws and regulations, labor laws, cultural issues (n.d.para.2). There are many bad stories about companies that are trying to start business in a foreign country like the classic Chevy Nova story. Chevy tried to sell the Nova car in Mexico and realized that "Nova" means "no go" is Spanish. These problems can occur even if a company is not outsourcing to a foreign country (n.d, para.5). To sum it up, Steve Ritchie, CIO at Investcor, says it best "Does outsourcing deliver cost savings? Sometimes does it improve customer service? Sometimes does it consistently deliver both? Almost certainly not" (2005, para.10).

Finally, it is hard for a company to control their subcontractors. Subcontracting in some countries can be a little risky because an unintended result of exported our businesses is "Almost as much goes out the back door of these factories as gray-market goods as goes out the front door. The companies will be forced to deal with competing in the marketplace against their own goods" (Virgin, B, 2003, para.18). One can see how this can be a problem. Another problem a company had with their subcontractors is quality control. It was Mattel's toy recall. Veiga, A. (2007) from the Washington post states "Mattel previously said many of the toys were recalled because of design problems. It also said certain vendors in China or their subcontractors violated Mattel's rules by failing to use safe paint or to run tests on paint" (p.2). This hurt Mattel’s image because worried parents do not want to buy products from Mattel now. Mattel apologized to China. Why did they apologize to China? According to Navarro (2007), a business professor at the University of California, "Mattel is worried that the Chinese government is going to make it difficult for them to produce, put their costs up and hurt their stock price" (p.1). Even businesses, which hired subcontractors from the same country, have the similiar problems. Some people have recently complained about major flaws in their homes. Lesh, the president of the American Society of Home Inspectors "Most builders hire subcontractors for virtually everything today," he said. "Years ago, they tended to work with their own guys. Now they don't know who the guys are. So they often don't know what kind of work is going on" (2007, para.2). As you can see, it is hard to make a relationship with customers by using contractors.

In conclusion, several years ago, outsourcing started to become a problem. Companies outsourced many jobs to another country, therefore, these companies had to downsize and a lots of employees lost their jobs. Outsourcing started to threaten employees’ livelihood and make employees feel uneasy. Businesses never can succeed without employees. Businesses need to be careful when outsourcing because there are no guarantee results from outsourcing. Also, subcontractor can cause different kinds of problems to companies. Outsourcing may not have a positive long term effects for businesses, and also American economy. Successful businesses need to have a sharp eye for good result for company. Several years ago, outsourcing started to become a problem. Companies outsourced many jobs to another country. On the other hand, outsourcing is just one of several problems a business has to worry about. If a business wants to start outsource, they should know about them in order to succeed.









Reference

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