Globalization Trends - Outsourcing

Globalization Trends

Outsourcing

Outsourcing is a sticky subject depending on what aspect of the term you are on. On the labor front outsourcing is generally regarded as a threat, while in the corporate management world it is regarded as an opportunity. Outsourcing is a global trend it is not just limited to the United States. Outsourcing is also not to be confused with “Offshoring”, which is the act of a company taking a part of it and relocating it to another country. Outsourcing is the act of contracting business processes formerly performed or in need of, to an outside organization.

In the late 20th century outsourcing became a method which businesses employed to reap cost reductions across many areas of the company, refocus on its core competencies, provide a means of collaboration, and generally increase profits by shedding non-essential processes. Outsourcing is not something new, although the term became popular in the 1980’s and politically a hot topic in 2004. In the United States outsourcing primarily became a method in which business could control labor and manufacturing costs in order to compete with foreign company’s importing into the US. The shift to outsource processes began in the manufacturing sector in the 1950’s primarily in the textile industry, by the 1970’s manufacturing outsourcing had spread throughout the entire sector, and by the new millennium had spread to the service sector. Today, India is the perhaps the most dominant country for American outsourcing but that is starting to fade as South America is starting to look more attractive to US companies looking to outsource service needs. The reasons behind this are mores so due to time zone proximity rather than labor cost although that is a factor (Helyar, 2012).

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