Advantages of Outsourcing

Outsourcing is the current trend that companies implement to increase their production as well as to improve their services so that they would competent enough in business globalization. It lightens the workload of regular employees by sharing it with their outsourced companies and personnel. Thus, it increases the efficiency of the company to generate more profit out of its transactions.

Outsourcing happens when a company, for example, transfers its tasks into clients or workers outside the core company. Their relationship is maintained by a certain contract that the client signed the moment he submits himself with the terms of service or policies of the company he plans to work with.

Outsourcing of companies from highly developed countries like the United States usually reaches to the far to other countries. Take for example customer supports and call centers. Many US-based companies utilize clients in India and the Philippines to work for them. Many electronic products that are owned by US companies, are being assembled in China due to greater number of available workforce.

Let us look at the advantages of outsourcing in a broader picture

ADDRESSES UNEMPLOYMENT

One advantage of outsourcing is that both the outsourced client and the company are benefited. Let's take for example the call center jobs. In the Philippines, there is a big boom of opportunities for call center job openings. The Philippine government supported the invasion of these big US companies to the country with the aim of lowering the unemployment rate of the country.

True enough! A lot of college students and graduate engage in call center jobs because the pay is even higher than the minimum wage earners in the country. They wouldn't mind having to sacrifice their sleep of working at night, since they work based on US time, just to earn enough money that can be used for their education or for their families.

INCREASE ECONOMIC STABILITY

Because of having lower number of unemployed citizens, the economy of the country where outsourcing services are provided would boost up since they would gain positive confidence to attract more investors in the country. This would then increase tax remittances and government could utilize these taxes in its economic programs, thus, maximizing the benefits that could be gained from the outsourcing companies.

On the part of the workers, jobs offered by the outsourcing companies could be of great help to improve their present economic situation. As population increase, greater demands for basic needs is predictable, therefore, the minimum wage offered in third world countries like the Philippines, would not be enough to carry out day-to-day expenses. Since the outsourcing companies provide higher compensation compared to regular jobs, it would provide a better avenue for poverty alleviation in the nation.

COMPANY CAN CONCENTRATE ON INTERNAL AFFAIRS

Having a third party to do the other jobs in the company that requires manpower like for example in customer supports, the company can have enough time focusing on improving its internal competencies without having to worry much of the external affairs.

The outsourced clients are skillful enough to work based on the needs in the everyday transactions of the company, thus, giving an extra ground for the company to strengthen its strategic plans in further uplifting the profit gained through its products and services.

OUTSOURCING COMPANY SAVES MONEY

On the part of the company who outsourced, a lot could be saved for the salary of their workers. The minimum wage in the Philippines is of course lower than in the United States. Therefore it would cost less of these companies to hire external workers in the Philippines than in the United States.

In a smaller scale, let's take pharmaceutical companies as an example. In the case of clinical trials of pharmaceutical industries, it would be hard for them to get their patients who would be willing to join in the clinical experimentation of drugs under study so their option would be to build good relationship with hospitals to have ease of access of target patients. Nurses ad doctors would also be there as specialists who can help them in the facilitation of the study, thus, the manpower and the target subjects that they need are already at hand saving them time and money hiring professionals as well as unreliable subjects if they would do it outside hospitals.

INCREASED INTERNATIONAL RELATIONS

The outsourcing companies that invest in other developing countries help in increasing economic relations between its own country and the country outsourced.

The western companies usually outsource their jobs in the Philippines, India and China due to lower minimum wage in these countries compared to western countries. As the outsourcing companies reach out to these countries, economic relations between these countries are increased as they support economic treaties that would benefit each of them.

In conclusion, outsourcing is one of the ways how globalization works in the present day. It has improved economic situations of developing countries, it has improved quality of life of the workers and it has strengthened the bonds between nations as the outsourcing company also could concentrate more in its internal affairs while maintaining a less-cost-more-profit system.

References:

http://en.wikipedia.org/wiki/Outsourcing
http://www.sourcingmag.com/content/c051011a.asp
http://www.microsourcing.com/outsourcing-benefits.asp