Outsourcing concepts and applications

Overseas outsourcing of jobs has quickly be come a controversial national issue. Some see outsourcing as a way of maintaining or increasing a company's competitiveness. Many others view outsourcing in a far more negative light, focusing on the people who lose their jobs.

Why Do Companies Outsource?

Various arguments have been put forth to justify outsourcing, such as,.".. some domestic businesses hired specialized workers stationed overseas to respond to U.S. limits on immigration. When these American employers could not get those workers to come here, they had to send the work to them."(Weidenbaum, 2004) But the truth is that companies sent such tasks over seas because they saved money. The United States was never dependent on new immigrants to fill light manufacturing jobs.

Another argument goes like this: "... The shift of some telemarketing and customer service jobs overseas followed an earlier pattern within the United States when such work was outsourced from urban to rural areas where labor costs were lower. " (Weidenbaum, 2004) However, it would be far easier to teach rural Americans, who already speak English and understand American culture, to do these jobs. At the same time, companies who make that choice help support depressed economies within our borders. Since the cost of living is lower, wages can be lower without treating the employees badly.

Another argument says, "Viewing these matters in a broader perspective, the age of economic isolationism has long since passed." (Weidenbaum, 2004) However, this country has not been economically isolated for centuries. Southern planters made fortunes before the Civil War, for instance, selling cotton to the rest of the world.

What these outsourcing enthusiasts don't tell us is that outsourcing doesn't always work. One author notes that outsourcing has a failure rate of about 50%. A whole new field of expertise has sprung up mediating the difficulties that come with outsourcing, and in spite of that, 50% of outsourcing agreements are not renewed when the first contract is up (McClelland, 2003). So while outsourcing may work well for some companies, for a significant number of companies it represents and organizational setbacks.

In spite of the difficulties that come with outsourcing, that can include providing extended training for the foreign workers, language and cultural barriers, the process is being enthusiastically embraces. A search of one database turned up only one article critical of outsourcing out of 100, and that article dealt with the outsourcing of professional services. The author noted that being a Certified Public Accountant (CPA) involves more than calculating taxes and dealing with other financial transactions. They note that within our own country we have been racked by financial scandals that included accounting firms, who colluded with the businesses to "cook the books" and defraud stockholders (Mintz, 2004). The author wonders, if we have trouble regulating accounting practices within our own country, what kind of ethical considerations are there when CPA services are outsourced? However, even that article was not critical of outsourcing "noncore" functions (Mintz, 2004).