Outsourcing, especially offshore outsourcing, has been constantly cast in a bad light for its perceived ill effects on the job security of thousands of workers from developed economies. However, it is interesting to ask this question: If outsourcing’s negative effects far outweigh its positive results, then why does it still flourish? Is it all about the money? Apparently, the answer is “No”.
This is not to say that outsourcing does not have its bad side. In this two-part blog post, let us explore where outsourcing works, and where it should improve.
- Outsourcing allows small and medium size businesses to have more workers. Small and medium-size enterprises do not have the luxury of permanently employing large armies of workers to work on projects, such as software development, QA, accounting systems, documentation, or customer management. However, outsourcing allows them to engage as many workers as their projects need—or as they can afford—temporarily. At the end of a project’s lifecycle, a lot of companies find it easier to halt relationships with vendors than with employees.
- Outsourcing allows companies to focus on their core competencies. This is one of the most popular and oft-repeated responses to outsourcing critics, and it is worth mentioning many times over. By outsourcing processes that require low or mid-level skills, companies can focus on parts of their operations that need high levels of skills gathered from extensive industry experiences. Basic Java development can be handled by offshore workers, while software architecture and design are best handled by onshore resources.
- Outsourcing offers staffing flexibility. With hundreds of thousands of available workers in application development, customer management, and support services available in low-income service providers, companies have the flexibility to hire on project basis. At the end their projects, it is easier to decide whether to retain talents or hire new ones, even new vendors.
- Outsourcing saves money. Offshore workers in an emerging economy, such as the Philippines, can provide the same quality of work at a much lower cost. Outsource workers in emerging markets are college graduates and most have job experiences relevant to outsourcing requirements. For example, IT workers in Manila are college degree holders who have also received formal trainings in specific programming languages. On top of that, IT vendors also arm their workers with trainings in consulting, customer management, communication, and methodologies. Over time, the smaller amount paid to low-wage outsource workers increase in value.
Continued… (2nd Part) The Pros and Cons of Outsourcing – 2: Why Outsourcing May Not Be For You?