Top outsourcing locations now serve as hubs for service providers in several industries and outsourcing has become a way of doing business in the last ten to twenty years. In addition, it makes sense too. With top-notch infrastructure and talent pool readily available, it serves well to outsource to countries like India.
Although the recent downturn in the economy was cause for a decrease in growth for outsourcing, outsourcing firms are still doing well. They have also maintained their fair amount of growth in the wake of the recession, particularly when compared to other industries.
2010 statistics on outsourcing in India reveal that a number of outsourcing firms including web developers, software developers and web designers are actively involved in offering outsourcing as a global product. As the demand in the U.S. is decreasing, top outsourcing firms like Infosys and Wipro are planning expansions into Europe and other South American markets.
Moreover, companies outsourcing projects now have the option of nearshoring, where companies are outsourcing to locations that are close to the U.S. base. Mexico and Latin America are a case in point. Hence, this gives companies the proximity to check on their products and suppliers, while not having to run operations for outsourced components at home – the best of both worlds. Onshoring to rural towns in the U.S. is yet another option of decreasing costs due to the lower cost of living. However, of these types of outsourcing offer the distinct opportunity to travel to the sites for closer monitoring of production.
Despite the sagging state of the economy, analysts point out that outsourcing is here for the long term. Cost cutting measures, whether in terms of offshoring, nearshoring, or onshoring, are exactly what is required to stay competitive in today’s economy, while companies focus on the core competencies of their business. If outsourcing components like IT, in which they lack expertise, is what takes to balance out their equation in terms of cutting down overhead costs, then it is going to take more than just taxes to stop this phenomenon.
With the U.S. poised for a recovery in the offing, MNCs and medium sized companies are looking to get a head start on their core competencies. And this has given some impetus to outsourcing. There have been news of massive layoffs with big name firms like GM, etc. during the recession and the state of the American economy continues to be a concern due to rising unemployment. It appears the potential success of outsourcing is perceived as a threat to American jobs and sometimes the American economy. Proponents say that if the financial components, in particular, need to recover from the economic downturn, it is imperative that countries like India with expertise in IT are involved.
Outsourcing is a unique segment of industry as it caters to all industries and is relevant because it enables employers to seek expertise from suppliers when such expertise in not available in the home country. This is particularly true of talented graduates in journalism, engineering, medicine, English, and journalism and a variety of emerging technologies. The days of call centers representing outsourcing are over. As the industry matures, outsourcing is going to have to be seen as a valuable service that is intertwined with the host country’s economy. For instance, while U.S. students who study computer science should not be sidelined, it is also important to tap international skill when it is necessary to troubleshoot problems of a larger nature. In this sense, outsourcing needs to evolve into a collaborative effort rather than one that is labeled as ‘taking away jobs from the U.S. economy.
However, there are some distinct advantages to outsourcing when it comes to hiring. One is that there is no permanent commitment as far as the employer and the vendor is concerned. Like a telecommute position, the outsourced position is a ‘work at will’ contract for individuals, where the employee and the employee can stop work at any time. For employees as well, this turns out to be a good bet, since they remain their own bosses when choosing their projects.
As far as companies are concerned, outsourcing offers a chance to decreased employment overhead. For instance, when staff is required during a busy period, employees are available and when there is no work available, outsourcing allows for cutting down non-permanent staff. This makes outsourcing a cost effective method for slashing employee costs from a strictly managerial point of view.