Companies in America and other developed countries have been in the race to outsource services and products mainly due to the cheap labor and costs involved. However, this has led to many concerns about ample loss of job opportunities for the American people.
In the many debates and discussions that have been carried out on this topic, several aspects have been cited as the reasons for companies outsourcing their services.
Offshoring may seem like a smart choice because the same product can be manufactured or the same service delivered at a lesser price elsewhere. However, the scenario seems to be on the verge of a change today. Other factors have proved to be the driving force for major corporations and business offices to outsource their projects.
It was also expected that the progress of businesses in developing countries such as India and China would be a huge boost to the world economy. China was touted to be the global center for the manufacture of products, while India would lead the way in providing services on a global scale.
Some other factors behind offshoring
It seems that the decision to move jobs elsewhere is not guided merely by the costs involved. In fact, in many developing markets, wages have constantly gone up, while in the west, where economic growth has witnessed slumps, wages have come down in many companies in America. Hence, other factors including costs of transportation and materials, tariffs and regulations imposed by government, and energy-related issues have encouraged many enterprises to outsource their projects to developing countries.
It has been argued that expenses saved on the manufacture of products and delivery of services always return to that country in the form of profits, investments, and taxes to the government. In addition, enterprises look to utilize the large talent pool and skilled workforce that still lie untapped in these countries.
Companies have now realized that designing products at home and then shifting the manufacturing phase abroad slow down the whole process. For achieving full efficiency and for driving the pace of progress, more companies are outsourcing their processes and shifting their technological bases offshore.