Outsourcing

Outsourcing

Globalization begins during the nineteenth century and continues to thrive until today. It is no longer a form of trading, but a global integration in culture, politics, and economics. The available of new technology has made the trading process less expensive and more effective. Because of such improvement in communication and trade, many companies have begun to outsource their jobs to other countries. The increasingly growth of outsourcing has led to many controversies on whether outsourcing is an issue or truly a benefit and need to today economics. To be more effective in engage and debate such topic, one must understand some of the most critical factors of outsourcing, which are its background, social, and economic effects.
According to Logicaster.com, outsourcing is first refers in Adam Smith’s 'The Wealth of Nations' in 1776 as a method to cut down cost by hiring cheaper labor in less developed countries. It is actually not until the 1970 that companies have begun to outsource their business offshore to third world countries, especially India and China. Because of new development of IT (information technology) and internet, companies find it easy than ever to do business abroad. Gartner Inc. shows that the amount of global revenues reaches up to $298.5 billion in 2003. (www.logicaster.com). Marc Ferranti states, the trend of outsourcing continues to growth stronger as more opportunities become available for businesses. Innovation of new technology, lower cost of production and experienced managerial outsourcing are some of the large factors that have been contributing to the growth of outsourcing. “There are currently about 1 million IT and BPO (business process outsourcing) jobs being fulfilled on an offshore basis, but that could increase to 6 million or 8 million over the next 10 years, said Allen Weinberg, principal and North American leader of McKinsey & Co.'s offshoring practice.” (www.infoworld.com). While knowing the establishment of outsourcing,...