Saturday, August 12, 2017

The Simpson's Mister Burns sells outsourcing to his workers.

1 comment:

  1. Outsourcing- known by many names, value-sourcing, multi-sourcing, flexible resourcing partnerships, contract workers, consultants, sub-contractors, shared services- whatever you choose to call it, the effects on the economy are the same. Businesses are continually looking for ways to reduce overhead costs, increase profits and create value for customers. When company’s need to find quick savings, outsourcing helps keeps the budget above the waterline.
    In the late 1980’s global outsourcing became a cheaper method of manufacturing for many American industries. A few years later, India emerged as a new entrant into the IT global outsourcing market. Significant investments in education for the people of India by the Indian government helped transform the third world country into a global technology competitor. India was able to offer exceptional skill sets for less money than American counterparts. Many companies discovered outsourcing to offshore workers for defined scope deliverables, was able to provide noticeable cost savings. On the surface it looks like a profitable win all around. However, the American workforce was the victim in this corporate profit strategy.
    The growing reliance on outsourced workers displaced American workers. The effects caused recession symptoms, increased unemployment and eventually depressing the economy. The technology skill sector that once enjoyed the economic benefits of a professional lifestyle were effortlessly being replaced by overseas workers. The competition was fierce as outsourced workers were significantly cheaper and outperforming their American counterpart.
    Today we see a bigger reliance on outsourced workers in a wider range of capacities. The expansion of multi-national corporations around the globe have made it cost effective to operate businesses in a country where labor is cheaper, government taxes and restrictions are less and delivery options are economical (shipping or internet). The economic effect adversely prevents American money being regenerated into the American economy and instead is invested in foreign countries.
    Companies today are relying on a mix of internal resources combined with outsourced workers. The outsourced workers are used to backfill or augment staff for term assignments. According to the Deliotte 2016 Global Outsource Survey, reduced cost and improve efficiencies are the key reasons more companies are outsourcing or planning to use outsourcing. 45% of the businesses surveyed said outsourcing is helping to solve resource capacity issues, 29% are able to create global scalability and 28% reported it gives them access to additional intellectual capital. (Deliotte 2016) Deliotte also forecasts, the market will see an increased reliability on outsourcing in order to keep up with the rapid innovative and technology changes. Companies have shifted how they view outsourcing, it is now assessed by the value the outsourcing provides to the business and customers through growth and not solely based on costs.
    Historically, offshore outsourcing has caused tensions with American workers for the simple fact that it means loss of jobs for Americans and less economic growth for the economy. The movement to rely more on outsourced resources allows companies to expand globally while still providing value for the customers and experience growth in the marketplace. Changing American economic policies to make it less restrictive for businesses to operate in the United States will attract more businesses regionally. This will stimulate the job market and economy and eventually elevate Americans into the global outsourcing market place to gain a fair market share.
    References:
    Froeb, L. M., McCann, B. T., Shor, M., & Ward, M. R. (2016). Managerial Economics A Problem-Solving Approach. Boston, MA: Cengage Learning.

    https://www2.deloitte.com/us/en/pages/operations/articles/shared-services-survey.html

    https://www2.deloitte.com/us/en/pages/operations/articles/global-outsourcing-survey.html

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