Is
Your Job Moving Overseas?
The Ins and Outs of Outsourcing
(ARA) - Outsourcing.
You've heard the term on the news. You may have even lost a job because of it.
In any case, the practice of outsourcing job functions has become a fixture in
the American job landscape.
According to Forrester Research Inc., an independent technology research
company, rough estimates suggest that the United States has lost 400,000 to
500,000 information-technology-processing jobs to outsourcing over the last few
years. This is a small number in an economy that employs around 130 million
workers, but outsourcing is moving quickly up the wage-skill chain from
call-center employees to software engineers, medical specialists, lawyers, and
financial analysts.
Two statements can be made concerning outsourcing: Outsourcing is expanding, and
outsourcing is here to stay. These days, companies must find ways to streamline
operations and create greater efficiencies if they are to compete in the
expanding global marketplace. Therefore, outsourcing operational functions that
are not part of a company's core competency is an alternative that cannot be
ignored.
According to Dr. John Davis, program chair of Argosy University/Dallas' School
of Business and Information Technology, "The outsourcing of part or all of
the human resources (HR) and information technology (IT) has become increasingly
popular with firms during the past five years. Both IT and HR require continuous
investment of capital each year to meet the departmental equipment and staff
demands. As companies look to reduce these escalating department costs they find
that internally they lack the expertise necessary to manage these functions more
efficiently and effectively."
In 2004, Microsoft announced it will hire as many as 7,000 employees worldwide
in its current business year as it continues to expand and to fill vacant
positions. Yet Microsoft is building facilities in India and has been hiring
there as it seeks to lower technical support and development costs. Outsourcing
to India has become a hot topic this year as many high-tech companies turn to
the country's growing pool of English-speaking software engineers as a cheaper
source of labor.
By outsourcing, companies often discover that comparable or improved service is
possible for less annualized cash outlay. Outsourcing firms accomplish this by
leveraging the cost of services, like insurance, hardware, and software across
many clients then passing back the savings through price considerations. In
addition, these firms can leverage all hardware and software upgrades, thus
assuring state-of-the-art applications for the same fixed fee.
"It becomes more difficult each year for company executives to justify
large increases in department budgets without a comparable return on that
investment," explains Dr. Davis. "Many executives have found that by
outsourcing these and other functions (manufacturing, software development,
plant maintenance, for example), monies can be better spent on improving their
critical core competencies."
But how does outsourcing affect individual employees and those who are trying to
find a new job? Dr. Andrew Ghillyer, dean of Argosy University/Tampa's School of
Business and Information Technology, believes that outsourcing is an easy sell
on the basis of numbers alone.
"Any organizational function that is potentially ‘outsourceable' is now
subject to instability, low morale, and high turnover as employees come to terms
with the constant threat of their job disappearing at a moment's notice,"
says Dr. Ghillyer, adding that "such a work environment is not conducive to
employee loyalty or creativity." Outsourcing makes the financial analysts
happy, but it also sends a very clear message as to the expendability of your
workforce and employees are likely to respond with the same lack of commitment
to your organization if a better opportunity comes along."
While we hear the term "outsourcing" in the news and in the workplace
a lot these days, outsourcing is as old as the Industrial Revolution. In the
1830s, the British textile industry became so efficient that Indian cloth makers
couldn't compete. Pittsburgh's Homestead Strike of 1892, in which seven
Pennsylvania steel workers and three Pinkerton detectives were killed, was
sparked by Andrew Carnegie's efforts to automate steel production. In the 1960s,
U.S. union protests over "de-skilling" -- replacing machinists with
automated tools -- ended peacefully with unions accepting no-layoff pledges in
exchange for new technology.
Corporations are not the only groups considering or rejecting outsourcing as a
viable tool for growth. A 2004 report from the National Conference of State
Legislatures indicated that earlier this year, six states -- Arizona,
California, Colorado, New Jersey, South Carolina and Washington -- were
considering outsourcing bills to bar or restrain physicians and health care
entities from outsourcing work that would involve sending and handling of
confidential medical information internationally.
With 2004 being an election year, U.S. job and economic growth will undoubtedly
be a hot topic in the news and in campaign speeches, with outsourcing being an
area of great debate. Observers may disagree about outsourcing's role in the
current cyclical recovery, but outsourcing will clearly be a powerful source of
structural change in labor market dynamics over the next decade.
For more information, visit Argosy University at www.argosyu.edu.
Courtesy of ARA Content
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