A lot of American citizens have been screaming blue murder whenever they here the term “outsourcing”. Outsourcing is of course not a new occurrence – although a lot of citizens have been made to believe that outsourcing is the “new” thing that is taking away their jobs. A lot of service companies began creating jobs overseas in order to gain access to foreign markets. These companies audit, repair and consult where their customers or clients are located. To put it in a way that you’d understand, oversees clients or customers do not have to come all the way here. In addition, a lot of foreign markets are really growing rapidly as lots of domestics companies become saturated. About 60 percent of the revenue of American IT companies is estimated to be created overseas. In a variety of industries which range from consumer products to banking to work placement to even aerospace – this leads companies to report that their overseas revenue totally exceeds their domestic sales.
Basically, a lot of companies are taking time to focus more on their core competence. They simply subcontract a lot of their activities to domestic suppliers. When viewed from that perspective, offshore sourcing is really a minor part of the trend to decentralize business processes. Moreover, these companies have also learned that in a lot of cases, the higher productivity of United States workers offset the wage differential and all the other costs of operating out of the country.
The cost reductions gotten from outsourcing helps to open up new market opportunities for companies in the United States companies, and this also help to generate additional work here in America. In a general way, the company end up with a lot more resources in order to improve its performance. You need to understand that outsourcing and the savings that it generates are really the beginning and most definitely not the end of the adjustment process. The company that outsources can now afford to buy new equipment and then expand training programs. Thus, its higher domestic labor costs can be easily offset by much higher worker productivity.
Over a period of time, there is a real positive feedback concerning the effect of outsourcing. As developing nations develop their own economies, new markets will also be created for the United States made goods and or services (wink) – this is simply a win-win situation.
Daven Michaels Author of the book Outsource This!