AMERICAN OUTSOURCING

American Outsourcing



American Outsourcing

Introduction

The dramatic changes in the economy led to a global increase in international trade. This shifted the focus of researchers from domestic to international outsourcing. These researches identified the distinctive character of the current phase of economic globalization as an international fragmentation of production. The international fragmentation of production involves a process that spread across the production sites in various countries. Outsourcing and intra-firm trade within large corporations are the mechanisms which allow such fragmentation. International outsourcing is a qualitatively new phenomenon because the earlier phases of globalization mostly involve trade of finished products. In recent years, it has been analyzed that there are economic and socio cultural consequences of outsourcing. These consequences include (a) the Global Value Chains (GVC) Initiative, (b) the work on Global Production Networks (GPN), and (c) within the discipline (Williamson 1985, 156).

This paper highlights the key aspects of outsourcing in relation with globalization. Although the current market of information technology outsourcing is much more mature than others, the global outsourcing operation of the business tends to grow faster. The paper will also discuss the GE operations outsourced in different countries in order to minimize the labor costs and effectively work to expand their market (Rao, Nam and Chaudhury 1996, 27).

Discussion

Outsourcing can be defined as subcontracting a production process to a third-party company. As a result of outsourcing, firms move entire business functions to external service providers. Outsourcing can significantly increase the efficiency of a company and give it the ability to attract almost any staff to implement a wide range of services necessary for the business during that time. Outsourcing is a practice which being carried out by large companies. The purpose of outsourcing is to reduce the cost of the processes significantly as the company performs that task through external sources (Prahalad and Hamel 1990, 79).

The global economy accompanied by a shift in production areas between industrialized countries within each economic zone, on the one hand, and industrialized countries to emerging countries on the other. In some cases, production for export markets leaves the country to locate closer to areas of opportunity. In others, production for the domestic market transferred abroad before being re-imported. These movements are known collectively comfortable and disturbing "off shoring". The diversity of the phenomenon explains the difficulty to assess the extent and in measuring the impact in terms of employment. In total, the overall cost / benefit of the international opening of the market is probably good for the country, but at the cost of the sector and territorial adjustments that keep struggling to support public policies (Grossman and Hart 1986, 691).

Small and medium size businesses use outsourcing because it is less time consuming and less difficult. In this way, companies can focus more on the important core functions of the company. Before outsourcing, a company has to keep in mind some tips for making the decision: First, the company must make sure that the outsourcing company is reliable and ...