...The Effect of Offshoring on Business Charles Taylor ISTM 5002 Communication Skills for Today’s Information Technology Leader 2819 Admirals Walk Drive East Orange Park, FL. 32073 Telephone: 904-269-1336 Email:ctaylor108@capellauniversity.edu Instructor: Susan Duff Introduction Offshoring also known as offshoring outsourcing is a term which came to use more than a decade ago to describe a practice among companies located in the United States of contracting with companies outside of the US borders to perform services which could have been provided by in-house employees. In today’s globalized world outsourcings are used by companies as a means to lower labor cost and increase profits. This practice is not something new, before the internet and before business decided to globalize outsourcing for them was contacting a local temporary employment agency. Now in the 21st century a great majority of US companies has outsourced their call centers to India and other third world countries in an effort to reduce operation cost. The question is has offshoring improved customer service or hampered customer service. The biggest disadvantage with offshoring is loss of knowledge, cultural issues, potential security issues, language barrier, finding qualified personnel, local infrastructure, control and flexibility offered by local law and greater effort for knowledge transfer and process setup. Analysis India call centers help US companies cut overhead costs by decreasing...
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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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...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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...In response to the article on “Outsourcing Jobs: The Myths and Realities” by Martin N. Baily and Dian Farrell, it surprised me to learn there could be positive effects to the American economy as a direct result of outsourcing jobs overseas. Typically, I have read mostly about the unsatisfactory results that are given attention in the daily headlines. Jobs sent overseas means less jobs here at home; where does this leave the common American worker in the wake of this economic shift? After reading this article, I’m having a difficult time accepting there can be a positive effect to this transition. Since the emergence of outsourcing or offshoring, in the 1990’s, corporations have been implementing the allocation of resources in increasing numbers. In the beginning of this article, it details how much U.S. companies are saving by shipping white-collar jobs overseas. “For every dollar of corporate spending that moves offshore, American businesses save 58 cents. Companies can reinvest the savings in new business opportunities, pay additional dividends to shareholders, or both. Moreover, because wages are lower in the relevant foreign labor markets, companies can hire more (as well as better-qualified) workers to do the same job, and spend more on supervision and training (Baily and Farell, 2010).” This, in theory, sounds like a win-win situation, for both the U.S. and foreign economy where the jobs are being created in. U.S. Companies cut costs, and countries, like...
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...simply using the visa program for cheap labor. Another concern are consulting companies that bring in offshore consultants. These companies are allegedly using the visa to bring workers to learn skills and then off-shoring the service. Ron Hira, a professor of public policy at the Rochester Institute of technology, has been studying how consulting firms use the visas to help American company cut costs. He says, “What these firms have done is exploit the loopholes in the H-1B program to bring in on-site workers to learn the jobs [of] the Americans to then ship it back offshore.” Indeed, information on Molina payroll indicates that offshore workers in India were paid half the price allotted to Americans, confirming the cost cutting effects of offshoring services. With an expansion in the H1-B visa program, more companies can gain access to foreign workers. Companies would have an incentive to exploit the loopholes in the system for cheaper labor costs. After all, that’s what some companies are doing right now. Expanding the...
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...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 and deposits. A company may legitimately move offshore for the purpose of tax avoidance or to enjoy relaxed regulations. In the last five years, offshoring has shifted from being a niche strategy to a dominant...
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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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...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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...Proposals and Research Nashira Wiggins American Intercontinental University Abstract What are the differences between formal research and a business proposal? What are the similarities? This paper will compare and contrast the theoretical and practical differences between formal research and a business proposal. The second part of this paper will explore the effects of human resources outsourcing on leadership performance and employee commitment. This paper will show that human resources outsourcing has a negative effect on employees and their morale. Part 1 Formal research provides basic information and statistics in a given field or industry depending on the focus of the research. Formal research may be used to research the demand for a specific product or service by researching similar products or services that are already on the market. Included in this research would be the general sales rate, the companies that market these products or services, and the current sale price. Research will reveal whether the market for the product is flooded or if it is indeed a good business opportunity. A business proposal is a document that proposes a method for completing a task. A business proposal can be used for launching a new product or for something like implementing a new strategy for a marketing campaign. “A proposal includes a brief description for the task at hand, a section describing the general approach to the task, a schedule for the task in question and a budget...
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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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...Offshoring, also known as offshore outsourcing, is the term that is used to describe the practice among companies located in the United States on contracting businesses beyond U.S borders to perform services that would otherwise have been provided by in-house employees in white-collar occupations. The term can be applied to U.S. firms that are offshoring the jobs of blue-collar workers on textile and auto assembly lines, for example, which has been taking place for decades. The extension of offshoring from U.S. manufacturers to facilitate providers has heightened public policy concerns about the extent of job loss and foregone employment opportunities among American workers. This concern was especially relevant to policymakers because of the national unemployment rate persistently exceeding 9% despite the end of the Great Recession in June 2009 . The outsourcing of service sector jobs from the United States was a response to the early 1980s recessions when employers narrowed their focus to the company’s core mission and contracted peripheral activities (e.g., janitorial duties) to other U.S. businesses. The 2001 recession caused employers to seek further efficiencies by tapping into the global supply of labor. U.S. businesses were able to outsource overseas the jobs of white-collar workers in some service providing industries as a result of widely disseminated technological advances that permit low cost, good quality, and high speed transmission of voice and data communications...
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...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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...Global Communications Problem Solution Paper and Defense Problem Solution: Global Communications (GC), once riding the telecommunications boom of the 1990's, now has a plummeting stock price and very nervous board of directors. The future of the company depends on its ability to benchmark and outsource operations while effectively communicating the strategic plan in an ethical way. Like many of their competitors in this volatile industry, profit margin is shrinking, competition is intense, and the whole industry seems to be a losing bet on Wall Street. GC has fallen behind the telecommunication industry. GC feels the pressures of the industries and trying to keep up with its competitors while watching its stock prices fall. Yet the investors are giving GC pressure to correct the problem. GC needs to offer better or a new services than what their competitors are not providing to their customers. Simply put, Global Communications is not where it needs to be in terms of globally viable business opportunities and general profitability. Our paper will present the problems currently confronting Global Communications (GC) and the solution of implementation of an aggressive approach to be a truly global resource. This paper will discuss the alternative solutions to their existing problems, risk assessment for the suggested alternative solutions, the optimal solution, and lastly the implementation plan to deal with the problem. Issue Identification GC has...
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...reason that most companies select to outsource is that they have a prospect to reduce needless expenditure. In addition, the risk engaged in outsourcing will also be reviewed, this risk is that company information is no longer confidential and the partners you selected to outsource currently to have access to all the company information. Faith and professionalism is significant in selecting to outsource to a partner. The advantages of outsourcing will also be conferred in this paper as well. I will explain in detail the method following outsourcing and the company following outsourcing. When establishing whether a company is supposed to, they contemplate many elements and one may be nothing, but the cost cutback. This also has an effect on estimate timelines, project timelines are decreased and the labor cost is cheaper. Many companies that decides to outsource their business because the pay rate is considerably lesser in the region where they would contract out their job. Another deciding element is in the assessment to subcontract the company, they do not have to employ consultant or experts who experiment in compound methods, and they are employed part-time to achieve specific parts of the project. When outsourcing a company does not have to employ stable workers for the duration of the project which in turn saves the company’s money because they do not have to concern about that stable cost to employees’. Some elements may persuade a manager not to subcontract a piece...
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