Outsourcing and Globalization

Introduction

The term outsourcing became popular in the United States in last few decades. It involves transferring employees from one firm to another. Also, outsourcing defines the practice of handing over controls of public service organizations to for-profit organizations. It includes domestic and foreign contracts.

In 21st century outsourcing plays an effective role in globalization. Globalization refers to the process of international integration. It arises from interchange of ideas, world views, products and culture. In the process of global outsourcing two organizations enter into a contract or agreement which involves the exchange of services and payments. Global outsourcing helps companies to increase their revenues. In current time period businesses are increasingly outsourced by suppliers outside their own countries, which are referred to the offshore outsourcing. In the process of global outsourcing several processes have emerged to refer various goals of the complex relation between networks or organizations.

Brief Literature Review

In globalization outsourcing helps to offer greater budget flexibility and controls. It provides organizations to pay for the specific services they need, when they especially need them. It decreases the need to train and hire specialized staff. Thus, it reduces capital operating expenses too.

In 21st century global outsourcing process becomes more and more popular through online technologies. Nowadays multinational companies use internet as a source of viable service delivery business. New technologies of globalization help people to run their business virtually from any part of the world.

The primary reason of global outsourcing is to rationalize costs. Companies outsource foreign workers to decrease high taxes, high energy costs, high wages etc. Although outsourcing cause lower labor cost, still it may cause lower customer satisfaction and poor quality productions. So companies should train overseas workers before they appoint them to work.

It is remarkable that since 1970s the wages of American workers were fallen dramatically. Such situations created a solution to start international trade of less skilled workers to the U.S. to develop the economic fortunes. Currently, trade-versus technology debate creates more fundamental questions about the outsourcing of less-skilled workers. But, companies prefer to recruit foreign employees as the U.S. citizens have higher benefit costs associated with Medicare, social security, safety protection and FICA taxes etc. Anyway, import marketers make short-run profits from cheaper overseas workers. Thus, they always prefer to recruit them. So such outsourcing processes cause positive and negative results to the globalization.

Problem Statement

Outsourcing involves contracting other people for them to conduct normal business activities. Globalization is the integration of business activities and operations such as products and services to many countries. The criteria of contracting clients to perform duties of a firm have become a challenge to many companies. This is because there are many functions in a firm and it is difficult to determine those that should be outsourced and those to be conducted by the firm. There is a need for a research for companies to understand the problems that it should outsource for their own benefits. Companies consider the cost of funding the operations in the firm to that of delegating it to other firms (Mclvor, 2005). Finding the best client to outsource to requires a company to implement some standards in to ensure that the activities are carried according to their requirements. This calls for research to ensure that outsourcing is carried in the best way for the benefit of the firm. Research will also act as a benchmark for companies to consider when conducting the process of outsourcing. Previous research about globalization shows that most firms seek to expand their businesses abroad. There are many challenges that face integration of products or services to other countries. Globalizing products and services require more than taking them to other countries or expanding the market share (Jones, 2010). It is more of understanding the needs of customers in different locations and implementing new strategies to improve products and ideas through research.

Purpose Statement

The purpose of this quantitative study is to understand the problems facing outsourcing and globalization and possible remedies. This study will help organizations determine the operations that should be outsourced and those that should be conducted by the firm itself. This research will help companies come with the best strategy to manage costs as well as maintain the quality and standards of their services and products. This research identifies the benefits of outsourcing for the company, challenges that it may face and possible remedies. This research goes beyond explaining what globalization is all about through giving the criteria that organizations should follow when outsourcing their operations to other firms. The research seeks to answer the question why most organizations outsource their functions and operations to other firms rather than conducting them. Through research, organizations understand the importance of globalizing their products and services and learn the best way to undertake this process (Jones, 2010). This research evaluates past information with the current information on outsourcing and globalization to advise the companies on solutions to the problems they face and emerging issues. This research is meant to provide information on the reasons why globalization is a key issue for most products brands in the market. The research will be conducted on multinational Corporations that outsource their operations. The research will use a questionnaire to collect data from employees of multinational organizations that outsource their operations.

Research Questions and Methodology

To fulfill the outsourcing process in an effective way, experts must follow specific methodologies. In different phases of global outsourcing process, research questions help to find out the solutions of results of such activities.

So, before recruiting foreign workers companies must ensure why they need foreign employees? What are their experiences in the specific field of work? Also, companies need to predict, what will be the results of less-skilled workers work?

After finding the answers of such questions, they may create certain phases of global outsourcing methodology. These methodologies may include firstly, development of mutual visions of companies and local society; such processes may help our society to understand their problem, which can further help to find specific solutions.

Secondly, acquiring complete information about the employee, such process may provide us the information about the employee and his/her experiences in a certain field.

Thirdly, estimation and finalization of goals of the company, such plans guide us to perform our works by following a definite standard. I think government organizations should pay special attention towards such recruiting processes, which may help a company to get a fruitful result from foreign employees.

Summery

In 21st century outsourcing is an important process of globalization system. Through this process the global unity is becoming stronger day by day. It helps to create international integration between two or more countries. Outsourcing process takes place in current world to reduce the cost of labor. However, such processes may cause low quality products because in most of the cases low cost workers are less-skilled. So such situation may harm the society. In order to control the quality of products, federal and state government should pay special attention towards each company through their organizations. Thus, it is possible to create a healthy outsourcing process throughout the globe in 21st century.