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Outsourcing
If effectively implemented, outsourcing can be a tremendous financial boon for a company. For example, in a country such as India with an English-speaking workforce and a highly technically literate population, even sophisticated jobs at an IT company can be employed by far cheaper employees than would be available in the United States. (Bagala, 2005) Thus, the careful choice of a country that is a good match for one's product, goods, and services is critical when considering the prospect of outsourcing. Outsourcing can cut costs, and it can also infuse a company with new talent and international knowledge from a talent pool that extends far beyond the United States. However, the services rendered must not experience a drop in quality from the consumer's point-of-view -- a poorly trained staff member that does not inform a consumer correctly about remedying a costly computer glitch will create bad press for the company. Additionally, the company must be sure that local laws regarding worker payment, the currency exchange, and the technical costs of outsourcing work will not be so high as to make the savings in salaries negligible
An additional problem with outsourcing, besides local worker competence and bureaucratic red tape in the foreign country, is that outsourcing often creates a negative public image for the company. It is assumed United States jobs are being sacrificed.
However, outsourcing not only lower costs and improves profits from the corporate point-of-view, but can result in the saved revenue being reinvested in new products and services, which creates further jobs for the research and development staff at home as well as abroad. (Chin, 2005) Consumers benefit from outsourcing because outsourcing helps lower the cost of goods and services, which in turn encourages them to spend more. But when outsourcing jobs that deal directly with consumers, or in nations with questionable human rights policies, again, a company must do a 'cost benefit' analysis, sometimes beyond the balance sheet, of what may be lost and gained in such an endeavor.
Works Cited
Bagala, G. (1 Jun 2005) "India Today." CIO Magazine. Retrieved 2 Nov 2005 at http://www.cio.com/archive/060105/tl_development.html
Chin, Spencer. (31 Oct 2005) "Outsourcing helps the local economy." (2005) Information Week. Retrieved 2 Nov 2005 at http://www.informationweek.com/story/showArticle.jhtml?articleID=172901898&tid=16008
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