Introduction
Companies can gain from outsourcing in a variety of ways, including cost-cutting, improved product and service quality, and increased bottom-line profits. Multinational corporations and SMEs situated in affluent nations who have been outsourcing parts of their businesses, particularly to developing nations, for years are both aware of this fact. But how does it
benefit those who are getting the process' results?
How can outsourcing benefit underdeveloped nations?
Opportunity
Knowing the advantages of outsourcing can help you decide if it would be beneficial for your company. Here are three good reasons to attempt this.
1. You don't need to bring on more staff.
You can hire your help as a contractor and pay them when you outsource. This makes it possible for you to forgo hiring a worker, saving you money on everything from benefits to training.
2. Greater Talent Pool Access
There might not be much local talent available to you when it comes time to hire someone. This frequently entails making concessions. Many businesses have discovered that outsourcing gives them access to talent around the globe. It frequently makes sense to broaden your search if you require professional assistance.
3. Reduced Labor Costs
Did you realize that the One country outsources about 300,000 jobs annually?
Every business does this for a different reason, with many looking to reduce labor costs. Although outsourcing frequently enables you to achieve the best of both worlds, you shouldn't want to sacrifice quality for cost. Finding the ideal talent at the ideal price is simpler when you explore a global talent pool.
challenges
1. Absence of Control
Even though you can give instructions regarding what has to be done, outsourcing involves some control loss.
This is due to a variety of factors, including the fact that you frequently hire a contractor rather than an employee. It can be challenging to maintain the desired level of control when the individual is not working on-site.
Communicative Problems
Although it doesn't always apply, this is one of the major possible disadvantages. Here are some inquiries to make:
1. How does the person's time zone correspond to the hours that your business is open?
2. What kind of communication do you prefer? Email, text message, or phone?
3. Is there a solid internet connection available to the individual?
Communication is crucial for corporate success, claims Cameron Herold, the founder of a COO training program. Communication continues to be a big issue because a lot of American workers say they aren't engaged at work. Will outsourcing make this worse?
Issues with the Quality
Despite all the advantages of outsourcing, it only works well if you get the quality you want. Anything less will leave you disappointed.
This is not to argue that you cannot successfully outsource specific tasks, but you must first establish the standard of quality.
Influence on Corporate Culture
As a company owner, it's simple to concentrate on the advantages of outsourcing without taking into account how it might affect your firm as a whole. If you intend to outsource, you must take precautions to prevent a detrimental impact on business culture.
You don't want to take any actions that might compromise the productive environment of the workplace. Among the ways that outsourcing may harm a company's culture are as follows:
1. Disgruntled workers who may believe they are being replaced
2. Confuse workers who are confused about why you are outsourcing certain tasks.
3. Make the business's daily operations more difficult
Although outsourcing doesn't necessarily have a bad effect on corporate culture, you should take precautions before you ever move in that path. This normally entails talking with any affected personnel about your choice.
Before choosing in favor of or against this tactic, you should carefully weigh the numerous advantages and disadvantages of outsourcing. This shouldn't be taken lightly because it has the power to change organizational culture. Do you have any prior outsourcing experience? Did it help or hurt your business more than it helped?
The economic impact of outsourcing to developing country
Companies in wealthy countries have been gradually outsourcing portions of their business processes to developing nations like India, the Philippines, Indonesia, and other places for more than 20 years. This phenomena gave rise to the practice of remote working, or, in the lingo of millennials, being a "digital nomad." This is due to the fact that the majority of modern remote or outsourced workers often have their own home offices set up at their convenience or are frequently seen carrying their computers with them everywhere they go.
The idea behind outsourcing is clear-cut: non-essential corporate operations are transferred to nations with less competitive labor markets. These duties include, among others, customer service, bookkeeping, accounting, marketing, and human resources.
Outsourcing is a welcome concept for third-world countries like India and the Philippines—the two English-speaking Asian nations whose talent pools are being tapped for outsourcing jobs—as well as for businesses wishing to outsource, delegate, or subcontract commercial tasks. Outsourcing has helped emerging countries reduce their rising unemployment rates and prepare their labor forces for particular industries.
In the Philippines, the outsourcing sector has evolved into the country's main source of income. Business process outsourcing (BPO) enterprises, which employ over 500,000 Filipinos and generate close to US$ 20 million (PhP 1 billion) in total income each year, are now the Philippines' biggest source of foreign exchange earnings, along with remittances. The Philippines is presently renowned as the Call Center Capital of the World due to Metro Manila, the nation's capital region, becoming a rising hub for several outsourced sub-industries like the call center business, which accounts for 16% to 18% of the global market share.
Regarding India, Bangalore alone is home to over 100,000 tech workers, many of whom work for US businesses. One million workers nationwide are employed by US-based businesses like GE Capital and Microsoft. For years, American technology corporations have outsourced work to India. In fact, the global tech giant IBM employs 130,000 employees in India, or around one-third of the workforce, and it is continually moving some of its most important commercial operations there.
Taking on Social Issues
But outsourcing corporations aren't simply interested in the profit line. In third-world countries, they are also assisting in social transformation and community stabilization. The beneficial socio-economic effects of outsourcing enterprises are also being recognized by numerous governments and non-governmental stakeholders in developing nations.
Convergys, a corporation that manages information, has the Community Action Network (CAN), which encourages education in underprivileged areas and offers food and shelter to the homeless. While Sykes' Global Giveback initiative supports local clinical health care and physical fitness, BPO major Teleperformance is concentrating on giving learning opportunities. Similar to this, the three community boards of the telecommunications corporation Telus—located in the Philippines, El Salvador, and Guatemala—are giving away $100,000 each to regional grassroots charities.
Outsourcing Angel also contributes by reinvesting our earnings in local community development initiatives in the Philippines. We have sponsored Tribu Ni Bro (TNB) in their efforts to provide solar energy, donated to feeding programs for hillside tribes, and organized donation drives for vital medical supplies.
Important job
People in underdeveloped nations may not otherwise have access to well-paying employment due to outsourcing. These positions are not merely low-paying, unskilled positions designed to assist with minor business operations. Companies that outsource are not just looking for inexpensive labor; they are also looking for qualified workers who can support mission-critical facets of the company.
The knowledge that they have a job that can support their family gives workers a sense of pride and fulfillment, which is another benefit of outsourcing. The majority of those who receive outsourced jobs are college graduates who believe that without this kind of opportunity, they would never be able to secure employment that would pay them $400 to $500 per month, which is the starting salary for the majority of contact centers. They are offered the possibility to advance their careers in addition to job options. This fosters the development of young professionals who are self-assured, respectable, and upbeat.
Our virtual assistants now have a variety of career choices thanks to Outsourcing Angel, giving them both the financial flexibility and the time to be with their families for significant life events. This chance to work from home is greatly valued and has a hugely significant impact on the lives of our angels, allowing them to create the homes of their dreams, spend precious time with their families, and pursue online careers.
Conclusion
Outsourcing is advantageous for developing nations because it has raised GDP, created new employment possibilities, and increased the nation's foreign exchange reserves.
Because it reduces employment possibilities in developing nations, industrialized nations are opposed to outsourcing services to them.