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Over the past 20 years outsourcing as a phenomena has developed at a very fast pace. The growth of IT, aiding globalization and thereby generating multinational societies has given rise to situations where cut throat competition tends to take the better of us. One face of this competition is the frenzy of research and development, to cut costs and provide better services, which has manipulated itself into outsourcing. The situation seems more threatening every added day as more companies follow suite to the actions of their rivals.Outsourcing - The Real Facts
Outsourcing is seen by many economists as a win-win situation but is not always so. It has lots of downsides that most of us can't possibly conceive and only have to leave it to time. The present major downside of outsourcing is the fact that policies of the first world nations like UK and US for outsourcing are nothing but sloppy. There is no fair playing ground for companies big and small and the only alternative that they are forced to believe is to outsource. Imagine the plight of an organization that is quite happy without outsourcing and feels the punch when the rival starts grabbing all the profits by lowering the price.
All of us need services and that too at a lower cost. Here the products and services that come cheaper and with high quality get better sales that those with only quality. The concept of a fair playing ground is that an organization must not be affected much irrespective of the fact whether it wants to outsource or not. This is where the governments fail and this is where the fault lies.
Impact of Offshoring Jobs
With outsourcing the jobs are sure to go. The third world countries do get benefited because of this, but what about the people in the first world nations. They do feel unrest and no assurances are going to keep them from frowning about their precious job that was taken away. Here again the policies are to blame. Offshore outsourcing backlash on communities was bound to happen not because the jobs are getting outsourced, but because the way the jobs are being outsourced offshore today. People are not able to grasp the implications with a pinch of salt that is way too salty.
The Outsourcing Trap
The false image of outsourcing created today because of sloppy policies has lead to many outsourcing failures leading to heavy losses. Poor governance, lack of communications, cultural misfit, lack of knowledge and lack of good policies are responsible for major companies getting their feet burned due to outsourcing. Negative effects of outsourcing offshore are only bound to increase further in case the limitations on offshore outsourcing are not clarified.
Outsourcing has lots of drawbacks that are still not clear and will emerge eventually as time passes. The drawbacks can be in the form of a firm actually increasing its spending structure without its knowledge, emergence of new competitors and loss in the product/service competitiveness.
Beware of the Supplier - Future Negative Implications
Outsourcing service providers or suppliers are the ones that offer services to small and medium sized organizations. Big shots don't need these suppliers as they set up their own outlets. But the small and medium sized companies depend completely on these suppliers to outsource their processes. Most of these suppliers handle many processes from different organizations and in many cases, may even be providing services to organizations that are rivals or direct competitors of each other. This gives rise to a situation of the information being leaked.
As the supplier has complete control over processes of an organization he may leak it to the potential competitor who offers better rates. This kind of situation is more than inevitable. This can lead to organizations loosing its customers entirely to their competitors; a situation that outsourcing gave rise to.
One more situation that can develop is the supplier himself getting all the inside information can start his own services. This gives rise to a newer and stronger breed of competitors who have the ability to collaborate with competitors or set up individual branches with better services.
Other Drawbacks of Outsourcing
At this point it will be logical to highlight some very rampant drawbacks of outsourcing.
Firstly there is a situation today where employees have started fearing job losses. This gives rise to lower motivation and thereby decline in services. After all who would like to serve an organization that he feels is going to sack him for all his services. An employee can give the company 100% if and only if he feels that he is an integral part of the organization and not some dummy to be sacked when ever the company feels like. One more point here is that a sacked employee could even join hands with competitors and bring to light the weaknesses of the company.
Outsourcing can also lead to the alterations of well established job processes that can lead to unnecessary delays and conflicts. Lack of coordination between people having different cultural backgrounds and different time zones can also lead to time losses.
Looking at all these drawbacks, outsourcing really does not seem to be the magic answer for cutting costs. On the contrary outsourcing is way more complicated and can lead to drastic situational developments in the afterward. The governments of first world nations at this point need to analyze this situation and help develop a fair playing ground for organizations taking into consideration the negative effects of outsourcing offshore.γ
1 Comments:
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Anonymous, at 7:22 AM
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