Outsourcing has been a highly debated term in many countries over the past few years. Whether people like it or not, outsourcing has made deep impact on many economies. It’s not just the destination countries that have benefited from it; the job provider west has also earned a lot through outsourcing. However, with increase in protests against globalization & outsourcing and demand to generation of employment in native countries, some people say that outsourcing will decline now. So the question is:
Can outsourcing ever be dead?
Before talking about future of outsourcing, let us understand its past. It is early 90s (although outsourcing started long back, 1990s are the years when it made significant development in many countries to shape up for the golden era of outsourcing) and multinational corporations are looking at various ways to reduce cost. The third world countries, where labor costs are very low, seemed a very good option to utilize the human resources. In the same time, countries are also keenly opening the doors of globalization to attract foreign investors. Companies are trying to understand that what their western clients need and are busy preparing the work force for the same. Obviously, western job providers are more than happy as their work is done at a very low cost. They don’t have to pay according to the demands of their native countries and don’t even need to comply with labor laws. But quality is a problem which they are expecting to get over.
Now let’s have look at the present scenario i.e. 2011.
The so called “third world” countries have excelled immensely in providing quality solutions ranging from production to knowledge. Be it the finance or health sector, developing countries are handling so many projects from the west that they sometimes even need to employee western employees back there. Countries like India, China, and Philippines etc have raised an infrastructure to boost outsourcing and are growing at tremendous speed. However, the governments in the west are irked by the increase in unemployment. There election discussion is incomplete without outsourcing as a topic. Anti-globalization protests are high and business analysts think that now is the time for a reality check.
The future of outsourcing or any country in this business will hugely depend on brilliance vs. stupidity. Jeff Knepper, who is the general manager Information Services and Technology Group Risk Management Organization at Intel, once said that outsourcing depends on with whom you are working with. It is either stupid or brilliant depending on the time and energy that you put. Notably, US MNCs save billions of dollars through outsourcing and it is not easy to leave that kind of profit. However, President Obama refused to give tax benefits to companies who generate jobs abroad. Does it hurt the outsourcing companies? Not hugely. Apart from this, companies will have to stick to cost reductions due to increasing competition. Countries like USA cannot ban outsourcing at any cost because their companies may lose the niche over the other global companies this way. However, the cycle of outsourcing may see ups and downs depending on different factor; it seems very unlikely that outsourcing ever will be dead.