Outsourcing News For Best Freelancer

Outsource Website Design

Overview

Two organizations may enter into a contractual agreement involving an exchange of services and payments. Outsourcing is said to help firms to perform well in their core competencies and mitigate shortage of skill or expertise in the areas where they want to outsource

In the early 21st century, businesses increasingly outsourced to suppliers outside their own country, sometimes referred to as offshoring or offshore outsourcing. Several related terms have emerged to refer to various aspects of the complex relationship between economic organizations or networks, such as nearshoring, crowdsourcing, multisourcingand strategic outsourcing.

Outsourcing can offer greater budget flexibility and control. Outsourcing lets organizations pay for only the services they need, when they need them. It also reduces the need to hire and train specialized staff, brings in fresh engineering expertise, and reduces capital and operating expenses.

One of the biggest changes in the early 21st century came from the growth of groups of people using online technologies to use outsourcing as a way to build a viable service delivery business that can be run from virtually anywhere in the world. The preferential contract rates that can be obtained by temporarily employing experts in specific areas to deliver elements of a project purely online means that there is a growing number of small businesses that operate entirely online using offshore contractors to deliver the work before repackaging it to deliver to the end user. One common area where this business model thrives is in providing website creation, analysis and marketing services. All elements can be done remotely and delivered digitally, and service providers can leverage the scale and economy of outsourcing to deliver high-value services at reduced end-customer prices.

Reasons for outsourcing

Companies primarily outsource to avoid certain costs - such as peripheral or "non-core" business high taxes, high energy costs, excessive government regulation/mandates, production and/or labor costs. The incentive to outsource may be greater for U.S. companies due to unusually social security, Medicare, and safety protection (OSHA regulations).^[11] At the same time, it appears U.S. companies do not outsource to reduce executive or managerial costs. For instance, executive pay in the United States in 2007 was more than 400 times more than average workers—a gap 20 times bigger than it was in 1965.In 2011, twenty-six of the largest US corporations paid more to CEO's than they paid in federal taxesSuch statistics imply that the reason companies outsource is not to avoid costs in general but to avoid specific types of costs.
expenses,

high corporate taxes and mandated benefits, like

Digital outsourcing

One strong reason for outsourcing is the lack of available resources locally. This is particularly true for IT outsourcing, where the US has a lack of available resources. This knowledge gap can be felt more outside major cities.^{[citation
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The digital workforce of countries like India and China are only paid a fraction of what would be minimum wage in the US. On average, software engineers are getting paid between 120,000 to in countries like US and Canada.^[14] However, unlike typical sweatshops and manufacturing plants, most of the digital workforce in developing countries have the flexibility to choose their working hours and which companies to work for. With many individuals working remotely from home, the companies that require this type of work do not need to allocate additional funds for setting up of office space, management salary, and employee benefits as these individuals are contracted workers

Another method of outsourcing is using a microwork service for repetitive tasks that would otherwise have to be performed by employees.

Implications

For business

Management processes

Greater physical distance between higher management and the production-floor employees often voice over IP, instant messaging, and Issue tracking systems, new time management methods such as time tracking software, and new cost- and schedule-assessment tools such as cost estimation software.

requires a change in management methodologies, as inspection and feedback may not be as direct and frequent as in internal processes. This often requires the assimilation of new communication methods such as

Communications and customer service

In the area of call centers end-user-experience is deemed to be of lower quality when a service is outsourced. This is exacerbated when outsourcing is combined with offshoring to regions where the first language and culture are different.
Foreign call center agents may speak with different linguistic features such as accents, word use and phraseology, which may impede comprehension. The visual cues that are missing in a telephone call may lead to misunderstandings and difficulties^.

Security

Before outsourcing, an organization is responsible for the actions of their entire staff, sometimes a substantial liability. When these same people are transferred to an outsourcer, they may not even change desks. But their legal status changes. They are no longer directly employed by (and responsible to) the organization. This creates legal, security and compliance issues that are often addressed through the contract between the client and the suppliers. This is one of the most complex areas of outsourcing and sometimes involves a specialist third-party adviser.
Fraud is a specific security issue as well as criminal activity, whether it is by employees or the supplier staff. However, it can be disputed that fraud is more likely when outsourcers are involved, for example credit-card theft when there is the opportunity for fraud by credit-card cloning. In April 2005, a high-profile case involving the theft of $350,000 from four Citibank customers occurred when call-center workers acquired the passwords to customer accounts and transferred the money to their own accounts opened under fictitious names. Citibank did not find out about the problem until the American customers noticed discrepancies with their accounts and notified the bank.

Insourcing

Outsourcing has gone through many iterations and reinventions. Some outsourcing contracts have been partially or fully reversed, citing an inability to execute strategy, lost transparency & control, onerous contractual models, a lack of competition, recurring costs, hidden costs, and so on. Many companies are now moving to more tailored models where along with outsource vendor diversification, key parts of what was previously outsourced has been insourced. Insourcing has been identified as a means to ensure control, compliance and to gain competitive differentiation through vertical integration or the development of shared services [commonly called a 'center of excellence']. Insourcing at some level also tends to be leveraged to enable organizations to undergo significant transformational change.
Further, the label outsourcing has been found to be used for too many different kinds of exchange in confusing ways. For example, global software development, which often involves people working in different countries, cannot simply be called outsourcing. The outsourcing-based market model fails to explain why these development projects are jointly developed, and not simply bought and sold in the marketplace. Recently, a study has identified an additional system of governance, termed algocracy, that appears to govern global software projects alongside bureaucratic and market-based mechanisms. The study^[19] distinguishes code-based governance system from bureaucracy and the market, and underscores the prominent features of each organizational form in terms of its ruling mechanism: bureaucracy (legal-rational), the market (price), and algocracy (programming or algorithm). So, global software development projects, though not insourced, are not outsourced either. They are in-between, in a process that is sometimes termed Remote In-Sourcing. Projects are developed together where a common software platform allows different teams around the world to work on the same project together..

Standpoint of labor

From the standpoint of labor, outsourcing may represent a new threat, contributing to worker insecurity, and is reflective of the general process of globalization and economic polarization.

On June 26, 2009, Jeff Immelt, the CEO of General Electric, called for the United States to increase its manufacturing base employment to 20% of the workforce, commenting that the U.S. has outsourced too much and can no longer rely on consumer spending to drive demand.

Standpoint of government

Western governments may attempt to compensate workers affected by outsourcing through various forms of legislation. In Europe, the Acquired Rights Directive attempts to address the issue. The Directive is implemented differently in different nations. In the United States, the Trade Adjustment Assistance Act is meant to provide compensation for workers directly affected by international trade agreements. Whether or not these policies provide the security and fair compensation they promise is debatable.

Policy-making strategy

A main feature of outsourcing influencing policy-making is the unpredictability it generates regarding the future of any particular sector or skill-group. The uncertainty of future conditions influences governance approaches to different aspects of long-term policies.

Competitiveness strategy

Economic growth requires change, therefore a governance disposed to helping social and economic structures adapt to the changing environment will facilitate growth and a stable transition to new economic structures., until the economic structures become detrimental to the social, political and cultural structures. In less economically developed countries, policies which embrace the global phenomenon of outsourcing are a logical response to the ongoing movement towards "open markets" and "trade liberalization." Outsourcing, when interpreted as a trade phenomenon, complements trade liberalization strategies not only by promoting technological spillovers and capital inflows but also by offsetting the increasing levels of unemployment which result from opening up domestic markets. As prices adjust to those in the global market they no longer reflect domestic productivity, driving lower-productivity firms in the previously protected sectors out of business. Economic theorists argue that the resulting unemployment is only temporary as workers readjust and are eventually incorporated into the country’s most productive sectors, namely those which enjoy a competitive edge over other players in the international market. Nonetheless, rapid liberalization of markets in developing nations has not maximized the productivity potential of the region. In the Global South, where technological development is drastically lower than in the North, the redeployment of human and capital resources into new export markets has not come at the cost of necessarily low-productivity sectors but rather underdeveloped ones. In other words, many of the previously protected sectors were not competitive yet on a global scale, not because they naturally lacked the comparative advantage, but because industry efficiency had not yet been reached.In such cases where liberalization stunts the growth of potential industries, unemployment is a reflection of many underemployed resources. Outsourcing fills in the gap of receding protected national industries, improving employment and living standards. Among other economic externalities, outsourcing promotes capital inflows and infrastructure. In Mexico, wage convergence was faster in cities where outsourcing first took hold through maquiladoras, along the US-Mexican border. Studies suggest that for every 10% increase in US wages, northern cities in Mexico which are most influenced by outsourcing would experience wage rises of 2.5%, about 0.69% higher than in inner cities. Corruption and reduced tax revenues after signing the NAFTA Treaty have limited the economic resources available to the Mexican government, thus explaining the difference in investment policies between Mexico and China.Conversely, one of the successes of Asian countries in the twentieth century has been their promotion of higher rates of saving and investment. Studies suggest that the increase in capital input fueled the ‘Asian miracle’ rather than improvements in productivity and industrial efficiency. Though the previous conclusion suggests production conditions in the region remained static, the situation in East Asia experienced rapid transformations. Not only were national educational rates raised drastically, but there was also an increase in patenting and research and development expenditures. Rising levels of education, urbanization and even of patenting illustrate the active role of the government in advancing education as well as encouraging research and development.

Education strategy

Jobs become outsourced not based on the skill-level group it represents, but rather based on a variety Because of the overall uncertainty regarding the future dynamics of outsourcing it is not possible to predict the nature of labour demand in different regions. To better prepare the domestic workforce to future industry demands, therefore, national education programs ought to focus on flexibility and diversity of skills rather than on any specific task-oriented skills. Emphasis should go on preparing students both to succeed in non-habitual tasks and to adapt to changes in labour demands in the market.^[26] A specific goal that ought to be adopted is teaching students how to learn rather than teach them particular skills. This strategy would help students adapt to changing skill requirements in the future thus reducing friction from structural unemployment.^[22]
of other factors including transportation cost of ideas, wage and labour productivity edge.

Welfare state strategy

The uncertainty regarding the domestic productivity edge renders caution a key element of governance to ensure a sustainable regional development. Together with helping the unemployed re-enter the work force and smoothly transition into high-demand labour opportunities – potentiall Negative welfare effects of outsourcing have gathered substantial public attention. The possibility of outsourcing has internationalized labour markets which used to be local, opening up jobs which were traditionally non-traded to international competition. The resulting combination of lower wages and unemployment for certain jobs has driven the perceived ‘losers’ to engage in heated political debate. Labour unions in the European Union have succeeded in pushing through protectionist policies in favour or lower-skilled groups throughout the 1970s and 1980s, including the Common Agricultural Policy on farming. Interest groups opposing outsourcing have been more active to voice their disapproval because the negative outcomes of the phenomenon are more concentrated on specific groups of people, namely those losing jobs to external competition, whereas the benefits from it become dissipated among the population at large. Overall lower prices and greater quality and variety of goods in domestic markets are some of the benefits of exploiting a country’s comparative advantage through outsourcing. Unlike the alleged ‘losers’ from outsourcing, those affected positively by it lack the motivation to organize to voice their support. There has been a wave of protectionism concerned with deep changes in the social structure allegedly imposed on the global system through globalization and outsourcing. The activists see a readjustment of class systems and highlight an increased fracture in societies between the ‘haves’ and the ‘have-nots’ as different groups adjust to increasingly or decreasingly advantageous positions in the system of The fluctuations in employment levels are determined by the types of jobs which can be profitably outsourced or offshored. Domestic jobs become offshored or outsourced when lower productivity in other regions is compensated by lower wages, making outsourcing profitable even despite the added costs of transportation. The overall cost-effectiveness of the spatial unbundling of the industrial process thus depends on the cost of transporting specific services or ideas given the available technology. Because of this reason technological advancements such as the telecommunications revolution, air shipping or the Internet have deeply accelerated outsourcing and may continue to boost this process. The future results of technological ingenuity and innovation are unknown, as are its potential impacts employment levels on any given task or job across regions.In the Global South, policies attracting multinational corporations can help increase employment levels and promote growth. Governments which pursue such strategies facilitate welfare protection given the context of increased unemployment in industries which cannot compete with the international market due to trade liberalization policies.

outsourcing. Opponents of outsourcing have also denounced it as a threat to local cultural integrity. The argument on cultural disintegration points to the standardization of practices and norms as multinational corporations become involved with industries in regions culturally different from those in the country of origin. The alleged diffusion of culture has raised concern over the endurance of cultural norms and values, sociopolitical institutions and frameworks, or even cultural preferences and traditions in a context of increasing foreign presence. Increased uncertainty regarding future socioeconomic security ought to be met with policies promoting equality and a fair redistribution of economic gains for a government to maintain its voters’ favour. Because of overall unpredictability, governments will likely need to reassure civilians that the burden of employment jobs resulting from outsourcing will be shared among taxpayers.
y through re-training programs –, the government should also address the socioeconomic struggle and other welfare concerns of displaced employees.

Industrial policy

Outsourcing results from an internationalization of labor markets as more tasks become tradable.

According to leading economist Greg Mankiw, the labour market functions under the same forces as the market of goods, with the underlying implication that the greater the number of tasks available to being moved, the better for efficiency under the gains from trade. With technological progress, more tasks can be offshored at different stages of the overall corporate process.

Environmental policy

There are widespread claims that outsourcing has pushed environmental standards down in developing regions as countries compete to attract foreign projects and investment. Similar to lower wages, lower health and environmental regulations contribute to giving a country a comparative advantage over another due to lower production costs. The controversy this raises, however, is that unlike wages, lower health or environmental standards does benefit the new employees joining the workforce. Import competition has caused a de facto ‘race-to-the-bottom’ where countries lower environmental regulations to secure a competitive edge for their industries relative to other countries. As Mexico competes with China over Canadian and American markets, its national Commission for Environmental Cooperation has not been active in enacting or enforcing regulations to prevent environmental damage from increasingly industrialized Export Processing Zones. Similarly, since the signing of NAFTA heavy industries have increasingly moved to the US which has a comparative advantage due to its abundant presence capital and well-developed technology. A further example of environmental de-regulation with the objective of protecting trade incentives have been the numerous exemptions to carbon taxes in European countries during the 1990s. The evidence suggests that even if outsourcing has promoted lower environmental protection, there are no intrinsic geographic implications that the Global South has been more negatively affected than the North. o Although outsourcing can influence environmental de-regulatory trends, the added cost of preventing pollution does not majorly determine trade flows or industrialization.