Offshore Outsourcing
From LoveToKnow Business
Offshore outsourcing has become a hotly debated issue as more and more U.S. companies turn to it as a way of saving money with offshore production or gaining technical skilled and lower cost workers. Most companies who chose to do so have been accused of stealing American jobs and short-changing the American dream for both blue and white collar workers. The threat to technical professionals is the most well-known. Highly educated and hungry professionals in India, China and the Philippines often work twice as hard for less than a third of the going rate. Layoffs often accompany outsourcing decisions, further adding to the debate. But increasing costs for labor, insurance, workman’s comp and employee benefits are making some small business entrepreneurs take a serious look at employing global outsourcing firms as a means of cutting costs, streamlining productivity and staying competitive.
Offshore Outsourcing Provides An Edge
Optimistically-minded entrepreneurs see Outsourcing as a means to turn around dying businesses they purchase from more traditional business owners whose outdated management views won’t allow them to compete. The pace of innovation and product development today is fierce. Using offshore outsourcing saves funding to fuel development projects that would have been unaffordable, allowing the small business entrepreneur to compete in a world of corporate giants.
Offshore outsourcing can overhaul outdated operations and provide technical clout they need to compete, by freeing engineers and sales staffers from routine tasks that can be outsourced, to work closely with customers to determine their needs and deliver more quickly.
“Why reinvent the wheel?” is a common question heard from these innovators. Cutting costs allows a smaller company to compete, so forward thinking entrepreneurs see no problem in outsourcing all functions that cost the most, including human resources, customer service call centers, technical production or enlisting highly educated technical minds who live in foreign lands eager to earn substantially higher incomes and enjoy lifestyles far beyond their country‘s norm.
Some industry observers believe that small business is about to explode with new development and productivity, with offshore outsourcing acting as a catalyst to produce and deliver products faster at less costs, allowing smaller companies to compete against the huge companies with nearly unlimited in-house resources.
What is Being Outsourced?
Just about any business function can be bought from somewhere around the world. The Internet has made this transition possible, by allowing the global transmission of ideas to any company or contracted individual. These functions include back office, market research, insurance policy underwriting, engineering, designing tooling and factory production floor layouts, information technology systems management, human resources, office management, clinical testing, reengineering, financial analysts, consumer market research, architects and manufacturing labor.
Why outsource these functions? Because entrepreneurs are more creative and flexible than larger company departments chained by layers of procedures to approve, small business owners can quickly exploit offshore outsourcing’s potential, reacting to changing marketing conditions with innovation and new products.
This flexibility provides small companies the ability to compete globally with very low costs, by accessing a brain pool of highly skilled and innovative thinkers at low costs, allowing development, production and bringing new products to market at lightning speeds compared to the snail’s pace of larger corporations
New Management Skills Required
One of the problems of outsourcing offshore is managing a talent pool that you never see, relying instead on offshore managers to do the tasks. Communication sometimes becomes an issue, added to that of cultural divides and expectations. Each outsourced location, be in India, Europe, China or Russia, all have peculiarities of their own, compared to what most U.S. business owners know. Small business entrepreneurs will be forced to study these cultures in order to know what to expect and how to effectively deal with them. The result of this need may be a changing U.S. business educational system, where business majors change their focus to a global view, as innovation continues to advance.
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