• 2007-07-24

    There's something about "outsourcing"



    As per my dear friend Max's suggestion,I'm going to write something about oursourcing.

    Outsoucing is a fairly new phenomenon,especially when it comes to cross-border,international collaborations.(I did a post before about American Parmaceutical/biotech industry's newfound trend of outsourcing to China,you may read the post HERE.)

    To illustrate it,I'm going to give an example in the modern business context.A company is floundering in the competition against foreign producers who are apparently benefiting from low labour and raw-material costs.What shall they do to stay afloat amid such keen competitions?Thanks to internet network that comes along in the early 1990s and the booming cyber community it fosters,they now can bring in outside hands that would get some of their work done,at a considerably lower rate.What do they exactly do? Well,they "outsource" some of their outsourceable work to the legions of talents out there scattered around the globe.Internet makes cross-border contracting possible.Via the internet,you may just as well hire  an indian programmer to write programs for you if he charges a much lower rate as compared to an in-house employee.You don't have to worry about delivery,because the "outsourcees" are invariably capable and geographically irrelevant.Wherever they are,howerve they do it,you could just always count on it that they will get the job well done and delivered on time.In the internet era,delivery is just one click away after all.

      So two prominent factors sparks the budding and blossoming of outsourcing.Firstly,the ever fiercer competition that keeps driving out weak producers plagued by high labour costs.Secondly,the internet that makes cross-border contracting so possible.

      Thomas L Friedman's bestseller "The world is Flat"  cites quite a few examples of outsourcing.It lists it as the fifth flattener of the world.Judging from the unifying-theme of the book,Thomas is all for it,seeing it as a good way to stay competitive in globalized economy.

     Depending on your stance on the internet and where you are from,your views on outsourcing could be radically different. The two extremes of the opinion spectrum may be represented by "Outsourcing = loss of jobs for America. Outsourcing = loss of people who are interested in engineering, software etc. Outsourcing = end of American competetiveness. Outsourcing is unpatriotic."  and "I believe that outsourcing increases overall productivity and efficiency to the outsourced business, thereby generating additional revenues to the companies, which can be utilized either for the future growth of the existing business or to expand the other segments of the company, which would lead to the creation of new jobs".

    Well,it is indeed a controversial topic.My view? I think at near term,the American interests may seem impaird a little bit because most of the outsourceable work has been moved overseas which means some homegrown workers will have to be laid off.Besides,the outsourced industry will have a tough time progressing and maturing in the states because all practical work has been outsourced.The existing professional landscape will inevitably shrink.But in the long run ,it is my firm belief that outsourcing is in the best interests of American corporations.Just think.How much they will save by outsourcing part of the work overseas!They then could invest the money saved in ever-deeper and advanced R & D activites,so they could always stay on the forefront of technological advancement.The technology is the key after all.Bear in mind that oursourced is ofen,if not always,among the low-end work.They are not oursourcing their  echnological prowess away.They only outsource the parts that see the most savings.They still rule as long as they rule in the technological innovation and progression.

      Which camp are you in?