History of Outsourcing
The great industrial revolution influenced the beginning of outsourcing in the business world. This was the period between 1700 and 1900 in Europe. The increase in the production of consumer goods led to the manufacturers requiring more skilled labor, especially as the moved to different manufacturing zones across the world. The need to import labor from one country to another led to the concept of outsourcing, whereby professionals in fields such as engineering were paid for their skills and knowledge by different companies across the world. Outsourcing increased in the late 19th century and it became commonplace throughout the 20th century. Towards the end of the 20th century, outsourcing had become one of the strategic ways to enhance competitiveness in companies as they contracted professionals in different departments to assume a leadership role (Khan and Bashar 192).
The concept of globalization has made outsourcing a popular phenomenon as companies look to employ the most qualified human assets while reducing the cost of labor. Outsourcing continues to change shape as companies have leveraged technology to introduce the concept of telecommuting, which has enabled the business entities to outsource labor without necessarily having the human resources relocating from their countries. Outsourcing in the contemporary world also includes products and services, whereby companies develop manufacturing plants in different parts of the world where the cost of production is significantly lower (Khan and Bashar 194).
Public Opinion of Outsourcing
Members of the public have conflicting opinions about outsourcing. While some believe that outsourcing is good in the employment market, others claim that it introduces unnecessary competition for professionals in different fields. Proponents of outsourcing share the sentiment that it is a strategy that increases opportunities to compete in the global labor market. Outsourcing of products and services provides consumers with quality products at standardized prices, which makes the cost of living affordable. Additionally, outsourcing facilitates economic growth for the host nations of the manufacturing companies as more employment opportunities and public infrastructure are developed. However, opponents of outsourcing believe that outsourcing labor increases the unemployment rate in the nation (Jing and Besharov 836). Outsourcing products and services also result in unfair competition for the local companies trying to compete with the low prices offered by their competitors. Companies in the outsourcing business also limit the amount of revenue generated by the government if their offshore businesses are exempted from taxation.
Business Rationale for Outsourcing
Outsourcing has numerous benefits for companies. The practice helps companies to acquire the most qualified professionals and utilize their talents to create a competitive edge against competitors. Outsourcing also helps in the development of a workforce that does not add a big financial liability to the companies. Outsourcing labor from the developing economies is cheaper than employing professionals from the developed states; hence, companies can save money through outsourcing (Schniederjans 22).
Outsourcing of products has also proved to be highly beneficial to the profit margins of companies because they are able to manufacture products at relatively lower costs than in their home countries. The essence of business is to satisfy customers through fair prices for quality products, but the companies also focus on ensuring that they have a profitable margin (Schniederjans 23). Outsourcing increases efficiency in handling business processes because it ensures that there is an undivided focus on the core areas of business. The modern business world is associated with an outsourcing process that is highly reliant on technology; hence, the process results in higher levels of innovation and competitiveness for businesses.
Works Cited
Jing, Yijia, and Douglas J. Besharov. “Collaboration among Government, Market, and Society: Forging Partnerships and Encouraging Competition.” Journal of Policy Analysis and Management, vol. 33, no. 3, 2014, pp. 835-842.
Khan, Habibullah, and Omar KMR Bashar. “Does Globalization Create a ‘Level Playing Field’ through Outsourcing and Brain Drain in the Global Economy?.” The Journal of Developing Areas, vol. 50, no. 6, pp. 191-207.
Schniederjans, Marc et al. Outsourcing and Insourcing in an International Context. Routledge, 2015. Web.