Know what outsourcing is!

Harmony By Harmony, 12th Aug 2012 | Follow this author | RSS Feed
Posted in Wikinut>Business>Business Opportunities

Outsourcing is contracting with another company or person to do a particular function.

Outsourcing Trend.

Globalization begins during the nineteenth century and continues to thrive until today. It is no longer a form of trading, but a global integration in culture, politics, and economics. The available of new technology has made the trading process less expensive and more effective. Because of such improvement in communication and trade, many companies have begun to outsource their jobs to other countries. The increasingly growth of outsourcing has led to many controversies on whether outsourcing is an issue or truly a benefit and need to today economics.

Outsourcing is first refers in Adam Smith’s 'The Wealth of Nations' in 1776 as a method to cut down cost by hiring cheaper labor in less developed countries. It is actually not until the 1970 that companies have begun to outsource their business offshore to third world countries, especially India and China. Because of new development of IT (information technology) and internet, companies find it easy than ever to do business abroad. The trend of outsourcing continues to growth stronger as more opportunities become available for businesses. Innovation of new technology, lower cost of production and experienced managerial outsourcing are some of the large factors that have been contributing to the growth of outsourcing.


There have been many debates on the effects of outsourcing on the society. Outsourcing improves the conditions of thousands of foreigners by providing them with better jobs, increases their real wages, environmental as well as labor standards. Outsourcing helped increase women’s familial and societal status in third world countries. Women are not only given the opportunity to work, but to advance as well. At the same time.

Out sourcing and Off-Shoring.

There are many different definitions for outsourcing in focus to different purposes and fields, but the most general definition of outsourcing would be the transferring of jobs or services to a third party. The term outsourcing is usually mistakes with offshoring. Indeed offshoring is a part of outsourcing, in which companies transfer their jobs to foreign companies, instead of domestic companies. Outsourcing is divided into two type, technology services outsourcing and business process outsourcing. As the term itself indicates, technology service outsourcing mainly deals with computers or electronic infrastructure of the company. Its purpose is to provide company with effective computer systems and software in respond to the demanding of today business world.

Technology service outsourcing includes simple tasks such as website development to complicate tasks such as electronic commerce. While technology service outsourcing could be seen as an intangible aspect of the company, business processing outsourcing deals with the actual infrastructure of the company. Tasks such as customer service, to human resource, and security are all parts of business processing outsourcing.

Negative impact of outsourcing.

Outsourcing creates a middle class of culturally rootless youth that follow the western culture. Because of such adoption of the western culture, these teens are usually discriminated and brands as terrorists. Outsourcing indirectly causes personality disorder and many serious psychiatric problems to these teenagers. In addition, outsourcing also leads to negative working habits and lifestyles that destroy the traditions and cultures that have been existed for thousands of years. Workers begin to adopt habits such as smoking, drinking, and working overnight as outsourcing make its way through their land.

Effect on the economy.

The increasing activities of outsourcing along with jobs loss has led to many concerns. Outsourcing would result in loss of jobs, frequent career changes, as well as lower wages. While many people debates on such domestic issues, most generally agrees to the fact that “workers in developing nations will get new and higher-paying jobs, and consumers in the U.S. will be able to buy products that are cheaper than they were made at home.

The background, social and economics effects of outsourcing around the globe today should help people to have a better understand of this controversy topic. Outsourcing is no longer on a small scale, but on a larger scale that similar to that of globalization. Outsourcing definitely plays an important part in the global economy today, and whether we recognize it or not, it will become a larger part in our lives.

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