IT outsourcing - fight for Jobs or a cost reduction tool

hector By hector, 12th Sep 2010 | Follow this author | RSS Feed
Posted in Wikinut>Business>IT & Ecommerce

Outsourcing industry is a result of the need of US companies to reduce their costs and save their resource from engaging in non core business activities. Despite all the clamor against outsourcing, it is here to stay, as it has emerged out of business needs as not through government policies.

IT outsourcing - fight for Jobs or a cost reduction tool

Before answering this question, lets us ponder over the fact that how and why this concept of outsourcing became so popular and widespread. By definition itself outsourcing means concentrating on core business activities and asking third parties to do non core activities in lieu of monetary compensation. Like credit card companies can take care of the financial transactions, networking merchants sites with bank server and all such activities, but who will do the customer prospecting and complaint handling part. They will have to buy/rent a new building, train resources to handle calls and then monitoring these resources, their career progression, HR issues, transport issues, salary issues. so instead of getting into all this mess, somebody thought its better idea to give the work of handling outgoing and incoming calls to a third party and pay them on the basis of traffic or time. Similarly US companies found writing IT codes too cumbersome and costly as computer engineers charge a hefty amount in US. So they looked around the world if anyone can do it in a cost efficient for them and somebody from India said yes we can do that. work coming from US kept coming in truck loads and within a decade it gave birth to an new booming industry. Then people in US started thinking that we could have saved these jobs. But they are forgetting it was their need only which has given birth to this industry. Few more reason why technology and related industries outsourcing is here to stay are:
1. It saves money and effort for the organizations
2. Since IT companies have written similar codes for other so many other organization they can develop a software faster than the company which needs these software
3. Outsourcing gives these company agility to change products or to introduce new products as they need not worry about building IT capacity to implement new roll outs
4. IT companies reuse the same code of a lot of applications for different companies, if all the companies will do their IT work in house, they will have to reinvent the wheel again and again

Outsourcing is a result of business needs of multi national companies not because of any pact between two countries of because of some policies of a political party. Outsourcing can not be killed by making laws(although it can get curbed due to certain laws), it will exist as long as there is disparity in cost of production at two different places

Tags

It Outsourcing, Ohio State Ban On Outsourcing, Outsourcing, Unemployment In Us

Meet the author

author avatar hector
I am a MBA graduate, working as a management consultant. Prior to that i worked as a software professional. I like to write on new developments in IT and on current topics of general interest

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Comments

author avatar Retired
27th Oct 2010 (#)

Many thanks for sharing this article

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author avatar Denise O
27th Oct 2010 (#)

True.
Thank you for sharing.:)

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