The Effects of Outsourcing

Outsourcing, also known as offshoring, has become one of the most defined trends affecting businesses around the world. It plays a role in everything from politics to employment to gross national profit, and it is here to stay. However, despite the prevalence of this business practice in most of the world’s nations, many are unsure of the actual effects of outsourcing. Has outsourcing benefitted the world? Has it helped nations become more stable?

An Introduction

Outsourcing has actually been around for a very long time. The first business owner that turned to someone better equipped to provide a product or service outsourced. However, it’s become better defined in modern times, and is now a codified business practice. Essentially, outsourcing is nothing more than working with outsourcing partners located in other areas to provide a service or product. It can be done with virtually anything, from payroll to accounting to manufacturing and beyond, and allows companies to both save money and provide greater value to their customers, while becoming more competitive.

Negative Effects of Outsourcing

Like any other business trend, the effects of outsourcing have not always been positive. As jobs move overseas, workers are left with fewer hours or are even laid off. Perhaps the best example of this is the American automotive manufacturing industry. As more and more auto production plants went overseas, more workers had to find employment elsewhere. It can also cause problems with supply chain fragmentation, dependence on outsourcing partners and increases competition within industries.

Positive Effects of Outsourcing

While there are some drawbacks, the positive effects found with outsourcing to India and other nations far outweigh them. For instance, the increase in competition means that customers have more options from which to choose, fostering innovation and invention, as well as better business practices. Of course, companies are also able to save money through outsourcing, building profitability while cutting operating costs. Other positive effects include the creation of jobs within other economies, often where work is scarce and wages are low, allowing the growth of a larger middle class (the bedrock on which most businesses are built).

Effects of Outsourcing on the Economy

There’s been a great deal of negative talk about how outsourcing affects the economy of the country outsourcing. The shift of American automakers to overseas production facilities is again a prime example. However, it’s not all negative. In fact, global outsourcing actually helps create new jobs within countries outsourcing as other needs arise that must be met. These jobs often pay more than those positions outsourced, allowing better financial stability for workers.

Outsourcing Helps the Global Economy

Outsourcing is one of the most powerful forces affecting the global economy, and is responsible for considerable growth, particularly in developing countries. However, even countries outsourcing jobs find that, ultimately, the process benefits their economies as well. In short, outsourcing helps grow the global economy.

In the end, outsourcing is a good thing – it fosters growth, competitiveness, innovation and better quality services and products.

– Back Office Pro