Outsourcing and Relocation as Our Term Paper

Excerpt from Term Paper :

The likes of service oriented companies like America Online (AOL) is a prime example of how relocation and outsourcing has changed the way service oriented businesses function in this global economy. AOL continues to be one of our nation's most intelligent economic organizations as they take advantage of the outsourcing for the majority of their customer oriented operations. When an AOL customer calls in to have his password reset he may be talking to someone in India, South America or even the Middle East. Although the customer may not know where his call for help has been routed to, the end result of the call is that the problem is usually solved but at a greatly reduced cost to AOL compared to if that same call was routed to a call center within the United States boarders.

AOL's competition is just now beginning to understand the importance of outsourcing the various customer related functions of the business abroad. Like AOL and the Microsoft Network (MSN) before them, EarthLink has been forced by economic profit concerns to relocate all billing, sales, and tech-support call resources abroad. "EarthLink Inc. has announced plans to cut 1,300 jobs, 40% of its workforce, as the company consolidates and outsources its contact centers." (InformationWeek, 2004) This announcement will relocate the third largest internet ISP provider's customer related job functions from cities in Pennsylvania and California and all call-center jobs from Atlanta, Georgia to various foreign-based call centers.

Companies like Microsoft, International Business Machines (IBM), Dell and Hewlett Packard (HP) of the computer software and manufacturing industries were forerunners in the relocation and outsourcing game. "Hewlett-Packard Co. is another of the many corporations to outsource their customer services call center, by setting up a contact center in Bangalore, India earlier in the year." (Binghame, 2004) Although these large computer industry organizations outsource only parts of their operations, many smaller computer companies throughout the industry have chosen to outsource their entire operations abroad with the majority turning to India's many outsourcing and communications companies.

Customer call centers located in the United States no longer make economic sense when compared to the labor cost advantages attained abroad. Foreign call centers offer the same quality pre and post sale support and very often also offer free technical support. All these services are received at a much reduced cost for the organizations utilizing the services. Foreign call centers offer other advantages as well like Research & Development facilities that reduce the costs associated with bringing new equipment or technologies to market. The service and computer industry organizations will continue to find innovative ideas to reduce production and service costs and moving factories abroad seems to be a sound economic cost reduction strategy for the twenty-first century.

In conclusion, as our world continues to become more diminutive through the likes of technologies such as the Internet, fiber optics and Satellite communications, the economics of business revolve around profits that are achieved by organizational migration in this highly competitive global economy. The need to meet the demands from both consumers and investors has the business community under a great deal of pressure. Both the service and manufacturing areas in the United States' economy continue to search for novel ideas that will permit them to reduce costs while increasing revenues. In the 1990's, profits were achieved by reducing labor forces and buzzwords like layoffs, downsizing or corporate re-structuring equated to increased profits. But layoffs can no longer be the solution as production areas are working at a premium. To increase profit margins in the future, American organizations will have to move whole factories and countless jobs to foreign locations in order to meet the profit demands of investors and relocation and outsourcing will therefore continue to be the logical solution for doing business in the twenty-first century.


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InformationWeek (2004). EarthLink Cuts Jobs, Closes Centers; the nation's third-largest ISP says it needs to outsource more to better compete with AOL and MSN. InformationWeek, Jan.

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