Friday, December 16, 2005

Arguments for outsourcing

We hear arguments for software outsourcing that Outsourcing faces difficulties with the product quality. They are not able to provide the quality services that could satisfy the consumer’s needs, thus the profits gained are highly risked due to poor quality. In such condition, the vendor company could bring back his firm department or division back home to earn better profits. The decision to offshore outsource is like any of the other business investment decision involving risks. To expand the business organization of software outsourcing or any other business will definitely involve risks. The business when expanded to overseas, always incorporate software technology or to hire new workers. If the company does it correctly, it gains huge profit. Critics of outsourcing are busy debating on outsourcing failures without mentioning the instances of outsourcing success.

Many large businesses go the other way around. They realize the futility in arguing over these matters that outsourcing will lower product quality because if it were true, consumer demand will force firms to shift back to produce the goods or service on the onshore instead of offshore software outsourcing. Many success large companies have been successful in outsourcing and suggests that outsourcing is successful as it increases the product quality, lowers costs substantially or both.

Outsourcing

Economists were tensed and were continually debating on issues relating to the US economy downfall. Yes, the US economy will temporary suffer with unemployment and can bring heavy cost-value to those who lose their jobs, but in the long run the country will be full of employment and there will be surely rise in the US economy.

Policy solutions to offshore outsourcing are also criticized. One of the solutions is to provide training to these workers who seek for their new jobs, but some of the workers are already highly educated with bachelors and masters degree. Retraining them is difficult and may involve cost of education. But providing them incentives could be a way out of it, for the labor the workers really provide in their new field. The incentives could also be outsourced. But if we apply the onshore business ideology, the incentive provided to the workers could be cut-off whereas there will be more expense on the part of institution to pay higher wages to their own employees. Even if the work is replaced by machines, still the workers loose the jobs, and the unemployment prevails in the market.

Our economy has always been going through changes that cause dislocation and unemployment in the workforce hurting some of the Americans. But this does not been that the Americans are not favored but it is rather due to the change in economical strategy worldwide. However, economists do realize that labor is not always perfectly mobilized and some workers may find difficulty in getting new jobs

But however the firm’s motivation for replacing workers by providing training, seem to be identical to the motivation for outsourcing. As and how the company believes in improvising the quality and maximizing the services this could be done through software outsourcing as it allows for lower costs, even if quality reduces slightly or not at all, productivity increases which benefit the economy on aggregate.

A famous economist has quoted some lines on this topic “anything that increases economic efficiency-whether by outsourcing or a hundred other things- is likely to cost somebody’s job. The automobile cost the jobs of people who took care of horses or made saddles, carriages, and horseshoes.” These quotes are so much true and fact, that it hardly allows the space to argue or debate whether the offshore software outsourcing is beneficial or not. It’s a “creative destruction” involving the discovery process where we find ways to produce goods and service involving less cost-effective which in return will make us rich. A lamp of one nation provides light to all across the globe; forgetting its own root which is darkness.