...The Negative Effects 1 The Negative Effects of Offshoring Customer Service Com 120 December 1, 2009 Karen Halusek The Negative Effects 2 The Negative Effects of Offshoring Customer Service She is very excited. She just came home with her brand new computer. She and her husband had been saving every extra dollar for quite some time and they were finally able to purchase the computer they had been wanting. They succeeded in getting it set up and excitedly turned it on but could not seem to run it correctly. She called the toll free customer support line, confident that they would have their new computer up and running in no time. The call was answered promptly but she could not understand what the operator had said. She asked, “is this the Computer Company (fictional name)”? The customer service representative responded that it was, at least she thought that was what they said. The representative who answered her call had such a thick foreign accent that she could not understand them. She explained to the representative what the problem was, but she could not understand any of the information given to her. She asked to speak with a different representative; after being placed on hold for several minutes, she had no better luck with the new representative. She and her husband tried several more times to communicate with them, finally hanging up in frustration. They vowed to never purchase another thingamajig from the...
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...Is Production and Service Offshoring by United States Multinationals Bad for the United States Economy? Offshoring or offshore labor outsourcing is when a company relocates all or part of its production or services such as accounting or human resources to another country. There is no doubt that this has an effect on the U.S. economy. This paper will discuss the reasons that U.S. multinationals choose to offshore as well as the positive and negative effects this has on our economy. The downside of offshoring is the unemployment that occurs domestically when a U.S. company sends some or all of its production abroad. The disruption caused by this unemployment may lead to lower consumer spending by the laid-off workers which can in turn cause a reduction in economic growth overall. Additionally, unemployment caused by offshoring may necessitate a major effort to retrain the affected workers for new jobs which may be quite costly. Another problem with offshoring is the risk that products manufactured abroad pose because they are made without proper oversight. This can lead to dangerous and unhealthy imported goods such as toys tainted with lead and pet food laced with toxic substances. The positive side of offshoring is the money that a company saves on labor costs. They also avoid costly regulatory or environmental laws, and experience lower tax rates. Additionally, offshoring can be beneficial when certain company responsibilities can be done more efficiently overseas because...
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...Journal of International Business Studies (2009) 40, 901–925 & 2009 Academy of International Business All rights reserved 0047-2506 www.jibs.net Why are companies offshoring innovation? The emerging global race for talent Arie Y Lewin1, Silvia Massini2 and Carine Peeters3 The Fuqua School of Business, Duke University, Durham, USA; 2Manchester Business School, University of Manchester, Manchester, UK; 3 Solvay Brussels School of Economics and Management, Brussels, Belgium Correspondence: AY Lewin, The Fuqua School of Business, Duke University, 1 Towerview Drive, Box 90120, Durham, NC 27708, USA. Tel: þ 1 919 660 7654; Fax: þ 1 919 660 7769 1 Abstract This paper empirically studies determinants of decision by companies to offshore innovation activities. It uses survey data from the international Offshoring Research Network project to estimate the impact of managerial intentionality, past experience, and environmental factors on the probability of offshoring innovation projects. The results show that the emerging shortage of highly skilled science and engineering talent in the US and, more generally, the need to access qualified personnel are important explanatory factors for offshoring innovation decisions. Moreover, contrary to drivers of many other functions, labor arbitrage is less important than other forms of cost savings. The paper concludes with a discussion of the changing dynamics underlying offshoring of innovation activities, suggesting that companies are...
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...Offshoring of U.S. Service Sector Jobs Sheila Brown Busb 315 University of Texas Abstract Outsourcing is the agreement of diverse functions, such as data entry, programming, facilities management, disaster recovery, and telecommunications management, to outside providers of services. The main reason why organizations implement outsourcing is cost reduction, to leverage themselves ahead of their competitors, and as a means to increase their adaptability to changes in the business world. Outsourcing also provides the ability to benefit from the advances in information technology, while focusing on core business activities of the organization. Not only does outsourcing information technology functions enable increased concentrated efforts toward the organizational mission, but if skillfully planned and properly managed, contributes to healthy growth in the company’s fiscal bottom line. The implementation of offshoring has affected the competition and the expansion of the business service industry in an increasingly accessible and competitive global world. The effect of Outsourcing Within The Business Services Industry The business service industry has been impacted with intense pressures of reducing costs while also increasing new customers and introducing new products to create a center of attention to those customers. Lately, more companies are implementing offshoring strategies (i.e. outsourcing of operations to foreign countries) to cut costs. However...
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...environment present challenges and opportunities to firm finance and accounting functions to improve their value-add contributions to the business. One such opportunity is the offshore outsourcing of finance and accounting services. The business process outsourcing (BPO) market has grown substantially over the last decade and is expected to continue to increase rapidly. Offshore financial institutions can also be used for illicit purposes such as money laundering and tax evasion. Many countries, territories and jurisdictions have offshore financial centers (OFCs). These include well-known centers like Switzerland, Bermuda and the Cayman Islands, and less-well-known centers like Mauritius, Dublin and Belize. The level of regulatory standards and transparency differs widely among OFCs. Supporters of OFCs argue that they improve the flow of capital and facilitate international business transactions. ‘Outsourcing’ is the management and / or daily execution of a business function by a third-party service provider. Firms have been encouraged to outsource non-critical areas of business in order to focus on core competences (Quinn et al, 1990). There are many different outsourcing models, including the outsourcing of activities to firms in foreign ‘host country’ locations, which is called ‘offshoring’, and is the focus of this report. Offshoring means located or based outside of one's national boundaries. The term offshore is used to describe foreign banks, corporations, investments...
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...Offshoring Impact on U.S. Software Engineers for Leadership and Organizational Behavior Thesis: In my workplace, we have been outsourcing some technical work to Mexico. It has been interesting the feedback we are getting from our programmers. Although we’re outsourcing only when the work exceeds our capacity, they’re rightly concern about their jobs; they are concern about offshoring. I would like to write a feasibility analysis of offshoring work for my class project. I would like to be specific to “offshoring impact to software engineers”. April 17, 2011 Contents Offshoring Impact on U.S. Software Engineers 1 Contents 2 1 Introduction 3 1.1 Definitions 3 1.2 Summary 3 2 Data Section 4 2.1 Offshoring from a political perspective 4 2.2 Offshoring from a business perspective 7 2.3 Offshoring from software engineers perspective 9 3 Conclusion 11 3.1 Summary of Findings 11 3.2 Recommendations 11 4 Appendices 13 4.1 2008 Projected Base Salary Increases 13 5 Bibliography 14 1 Introduction 1.1 Definitions According to United States Department of Labor, software engineers (job 15-1031) develop, create, and modify general computer applications software or specialized utility programs. Analyze user needs and develop software solutions. Design software or customize software for client use with the aim of optimizing operational efficiency. May analyze and design databases within an application area, working individually or coordinating database...
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...have identified that the offshore outsourcing of services is starting to become a thriving business area, serves as a tool for maintaining and increasing the competitiveness and also an important asset of international growth strategies of many service firms. Bryborn & Jantell (2005) states that every now and then there is a boom of interest in cutting operating costs and every time there is a different ways of how it is done. In the 1990’s, the trends used to cut costs were re-engineering of business processes. However, in the early 2000’s, after the economical downturn, there was a similar trend to reorganize business processes and the trend was called offshore outsourcing. The major driving force for offshore outsourcing are customers who wants more of everything for less money. In MIDAS Bulletin Oct-Dec 2004 publication mentioned that, “ Malaysia is among the top three contenders for offshoring business in the world according to the 2004 Offshore Location Attractiveness Index compiled by the global management consulting firm A.T. Kearney, sources were quoted. Malaysia is ranked 3rd behind India (1st) and China (2nd) but ahead of Singapore (5th), Philippines (6th) and Thailand (13th). In its report, A.T. Kearney considers Malaysia a “ natural choice” for offshore services in view of its low costs, particularly for infrastructure, the most attractive business environment among emerging markets, strong global exposure of the workforce, and government...
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...Kristen Valla BBMBA 9111 Case Study 1 Offshoring at Global Information Systems, Inc. Background/Overview In 2004, Global Information Systems, Inc. began to put into motion the consideration of offshoring 3,000 jobs from here in the U.S to company locations in China, India and Brazil. These were highly compensated job positions. About half of GIS is separated into a division known as Global Services Divisions. A considerable portion of GSD’s business came from customers outsourcing their business process needs. GSD began to seek ways to cut costs and improve performance by “offshoring” certain activities in order to present the most attractive value proposition to potential customers. This case examines the issue of offshoring high-tech jobs different perspectives. The topics presented include determining the stock price effects of offshoring, examining the economic consequences of offshore work for both transmitting and receiving countries, when the consequences of non-competitive offshoring, and thinking about the challenge of investing in a career that is vulnerable to future offshoring. Opportunities/Challenges GSD has programming centers established in Bangalore, India; Shanghai and Dalian in China as well as Sumare, Brazil. That being said, with profit being a company’s number one concern, GSD could only consider the possibility of replacing jobs here in the United States with jobs offshore. The dollar amount of savings would be staggering. When all is...
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...International Bus Mgmt Victor Ebong Turn-in September 13, 2011 Offshoring & Outsourcing 1. Explain outsourcing, offshoring, and nearshoring and give the benefits/costs of each. Why are the benefits of offshoring being questioned more recently? (Reading 1) * Outsourcing- The farming out of work or certain duties to an outside organization. It can be to a company outside the country but in most cases when termed “outsourcing” it is being done within the country. The benefits of this are that jobs are not being lost in a particular territory or country and the work is being done at a more cost effective and efficient rate * Offshoring- Is the wholesale shifting of corporate functions and jobs to overseas territories. This may not necessarily mean shifting of the work to a different organization but rather shifting work to organization’s subsidiaries abroad. * Nearshoring- Is a concept similar to offshoring whereby companies shift operations, often IT related to foreign countries that are close to their own. The major reason behind this is that while gaining the labor cost advantage, many of the same languages are being spoken of the parent corporation. Additionally, these operations allow for travel on short notice without jet-lag. * The benefits of offshoring are being questioned now more than ever because of the extremely high unemployment rates here in the US. Many critics believe that those Americans out...
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...Company report on cross border offshoring management, cultural dimensions and gamification Table of Contents Table of Contents Executive Summary | p.5 | Chapter I – Introduction1.1 Purpose of the Report1.2 Effects of Globalization on Businesses’ 1.3 Company Background1.4 Outline of the Report | pp.6-7 | Chapter II – Cross Border and Offshoring Management 2.1 Introduction2.2 Defining culture2.3 Defining management and cross cultural management 2.4 Offshoring2.5 Key problems in cross cultural teams2.6 Conclusions | pp.8-11 | Chapter III – Analyzing and Explaining Cultural Dimensions3.1 Introduction3.2 Analysis of cultural dimensions and Country Comparisons 3.2.1 Power Distance 3.2.2 Uncertainty Avoidance 3.2.3 Long term orientation 3.2.4 Indulgence 3.2.5 Individualism 3.2.6 Masculinity 3.3 Limitations of Hofstede’s Dimensions | pp.12-17 | Chapter IV – Gamification4.1 Introduction4.2 Defining and Explaining gamification4.3 Gamification’s effects on business4.4 Examples of gamification4.5 Criticism – The dark side of gamification | pp.18-20 | Chapter V – Corporate Social Responsibility5.1 Introduction5.2 Defining and explaining CSR 5.3 The Foxconn and Apple scandal5.4 Recommendations and Actions | pp.21-22 | Chapter VI – Recommendations to Management | pp.23-24 | Chapter VII – Conclusions | pp.25 | References | pp.26-27 | Executive Summary Executive Summary This report provides an analysis and evaluation of...
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...“Outsourcing-Offshore” Outsourcing is said to have emerged a few thousand years ago with the production and sales of food, tools, and other household appliances. As soon as small communities and societies began to form, people with specialized professions began to trade with each other for goods and services. It can be said that each worker was outsourcing some activities to others. Research shows that even in the industrial age, a few thousand years later, very few companies outsourced any of their operations. Companies in the 1800s and 1900s were vertically integrated organizations, taking care of their own production, mining, and manufacturing from raw materials to finished goods as well as then shipping the goods to company owned retail outlets. These companies often handled their own taxes, employed their own lawyers, as well as designed and built their own buildings without outside assistance. This model does not apply to all companies during that time period, but it gives a general idea of the time. The history of outsourcing portrays that as onshore outsourcing continued manufacturing outsourcing of low-tech items such as toys, shoes and apparel goods began to take place. After this manufacturing higher value items like high-tech components and consumer electronics began to appear. In fact outsourcing history demonstrates that manufacturing was the first activity that began to move to offshore destinations in a quest for lower costs. Globalization began during...
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...A critique of “Into the unknown” published by the economist (November 13, 2004.) Fear of losing jobs to offshoring (rise in unemployment), but computers and technology may take these jobs anyway. “Has the machines in its last furious manifestation begun to eliminate workers faster than new task can be found for them?” Article says not to worry. The United States has experienced an increase in the offshore outsourcing (offshoring) of jobs in the service industry. Although offshoring is common in the manufacturing industry, it only recently began in the service industry. The recent increase in the service industry has occurred because of new technology and the ability to access information from anywhere. Those who oppose offshoring believe it takes away American jobs, lower wages, and causes declines in America’s standard of living and any benefits from offshoring are unevenly distributed. Offshoring in the industry has not negatively affected the United States. Currently, offshore outsourcing in the service industry has a net benefit to society and there is no reason for concern. Critics charge that the information revolution (especially the Internet) has accelerated the decimation of U.S. manufacturing and facilitated the outsourcing of service sector jobs once considered safe, from backroom call centers to high level software programming. (This concern feeds into the suspicion that U.S. corporations are exploiting globalization to fatten profits at the expense of workers.)...
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...Outsourcing vs. Offshoring Once e have seen the reason and downsizes about outsourcing, let’s talk about the implications it implies. Taking what Claudia has introduced, offshoring is a possible way out of outsourcing and the most controversial one. To clear your mind; the biggest difference is that while outsourcing can be (and often is) offshored, offshoring may not always involved outsourcing. Both may save company money, but only offshoring specifically means sending jobs out of the country, typically to a cheaper location. It includes both to the setup of a subsidiary abroad, or to the outsource activities of a company. So the question is, not just when to outsource, but when to do it through offshoring? 1. It depends on the quality you want to ensure to the client? Ultimately, the best solution for your business depends on your needs. If you need a high level of quality and communications, outsourcing locally may be best. If you need low costs and a systematized business, offshoring is often a better solution. 2. Or maybe it depends on the relationship you must have with the client? Activities which can be precisely specified can be offshored effectively. This is why software coding is often done in an offshore location. On the contrary, activities that require direct customer interaction, deep domain knowledge, or deep cultural knowledge should be onshored. Thus, customer service is usually conducted onshore because of the need to be close to customers...
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...| Commonwealth of Independent States | Global IT Today and In the Future | | Todd, Tate, Djokovic, Santaga, Johnson | 12/18/2011 | | Table of Contents Introduction to the Commonwealth of Independent States # 3-5 CIS Countries in the 21st Century # 5-9 Offshoring Strategies and Potential # 9-12 IT Infrastructure # 13-16 CIS Countries in the Future # 16-21 Appendix # 22 References # 23-25 Introduction to the Commonwealth of Independent States - Andrew Tate The Commonwealth of Independent States is a regional area that includes countries from the eastern part of Europe as well as countries from the Middle East part of the world. These countries include: Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyz Republic, Moldova, Russia, Tajikistan, Turkey, Turkmenistan, Ukraine, and Uzbekistan. Each of the countries belonging to the Commonwealth of Independent States are former parts of the Soviet Republic, which broke up along with the former Soviet Union, with the official date of the CIS formation being marked as December 8, 1991. The “founding” countries of the Commonwealth of Independent States were the Republic of Belarus, Russia, and Ukraine, with eight other countries (Armenia, Azerbaijan, Kazakhstan, Kyrgyzstan, Moldova, Turkmenistan, Tajikistan, and Uzbekistan) joining the CIS 13 days after the formation(http://en.wikipedia.org/wiki/Commonwealth_of_Independent_States). According to 2008 statistics, the total population of the countries that...
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...No. 2005-12-A Office of Economics Working Paper U.S. International Trade Commission Growth in Services Outsourcing to India: Propellant or Drain on the U.S. Economy? William Greene* U.S. International Trade Commission January 2006 *The author is with the Office of Economics of the U.S. International Trade Commission. Office of Economics working papers are the result of the ongoing professional research of USITC staff and are solely meant to represent the opinions and professional research of individual authors. These papers are not meant to represent in any way the views of the U.S. International Trade Commission or any of its individual Commissioners. Working papers are circulated to promote the active exchange of ideas between USITC Staff and recognized experts outside the USITC, and to promote professional development of Office staff by encouraging outside professional critique of staff research. Address correspondence to: Office of Economics U.S. International Trade Commission Washington, DC 20436 USA No. 2006-01-A OFFICE OF ECONOMICS WORKING PAPER U.S. INTERNATIONAL TRADE COMMISSION Growth in Services Outsourcing to India: Propellant or Drain on the U.S. Economy? William Greene U.S. International Trade Commission January 2006 The authors is with the Office of Economics of the U.S. International Trade Commission. Office of Economics working papers are the result of the ongoing professional research of USITC Staff and are solely meant to represent...
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