Outsourcing

Outsourcing

“Outsourcing is when a company contracts with an outside provider for services or other business processes, rather than employing staff to do these services in-house” (Brunelli). Companies use it as a way of filling roles within their company that would normally be too inefficient or expensive to create themselves. Common outsourced services are: human resource, sales and marketing, customer call center, IT, and finance and accounting. There are many advantages and disadvantages to outsourcing and many Americans believe that it is wrong to do. Is it?

America’s main concern with outsourcing is jobs leaving the United States for lower wage regions, such as Asia. Many companies choose to outsource because it is often cheaper in terms of salaries and benefits. The average minimum wage in China is $1.18 compared to America’s $7.25. With a reduction of labor costs and cheaper materials, companies are able to turn those savings onto the consumer. With the ability to lower the cost of the goods and services the company is able to stay within the competitive market and have “comparative advantage”. It has been stated that “Lower prices often lead directly to higher standards of living and more jobs in a growing economy” (Fraser, Kane and Schaefer).With the cost of salaries greatly reduced organizations are also able to have more money on hand, freeing their resources for other purposes, such as “capital improvements”.

Many countries have different laws and are often times more lax when it comes to safety regulations and plant maintenance. With outsourcing organizations won’t have to deal with certain government regulated offices such as and the Equal Employment Opportunity Commission (EEOC), Occupational Safety and Health Administration (OSHA), the Fair Labor Standards Act (FLSA). With outsourcing companies are also able to reduce the cost of risks. Instead of taking months or even years to find certain specialists for a single product, they are able to find another provider that already employs the specialist with materials that would be needed, this way is often faster and more cost efficient. Organizations are able to get the product on the market not only cheaper but faster as well.

Many companies that outsource are now able to work the difference in time zones to their advantage. They have created a non-stop business approach between the U.S. and offshore based companies. They have created the effect of keeping their offices open hours a day, this helps increase not only productivity but provides excellent client services as well. With the outsourcing of call centers, businesses are able to generate service hours that are more appealing to what we, the American consumer, have become accustomed to.

Although there are many advantages to outsourcing it doesn’t come without its disadvantages. When outsourcing overseas or across the border,