Outsourcing to India
Over the past two decades, globalization has improved, increasing the amount of trade taking place across borders. During this period, the phenomenon of outsourcing has also been rising. It should be noted that outsourcing has been part of the business environment after taking center stage in the mid 90’s during the financial crisis. Nonetheless, the application of outsourcing is different from the 90’s (Sharda & Chatterjee, 2011). In an effort to understand the concept of outsourcing, it is necessary to highlight its pros and cons, the reason behind its popularity, and affects on the US and the global community using India as a case study.
Due to the changes in the economic market, companies continue to adopt strategies to reduce production costs while maintain high quality products and services leading to an increase in the outsourcing phenomenon (Hindle, 2005). Outsourcing has several advantages with the major ones including tax benefits, cheap labor and increased productivity. In choosing the favored outsourcing destinations, several factors are considered including geographic demography. For instance, India is a more preferred destination for service and IT industries owing to cheap labor, effective sills, courtesy and language consistency (Kobayashi-Hillary, 2013). The above advantages have seen companies in the US such as Microsoft increase its global reach and improve its competitive position in the global market.
In summary, outsourcing has significant advantages for both the host country and foreign companies. Some of the advantages include increased profits and improved employment opportunities. Consequently, stakeholders and interested parties should endeavor to improve outsourcing in the global market. Besides, it is vital for them to adapt to the changes that characterize the global market.
Hindle, J. (2005). HR outsourcing in operation: Critical success factors. Human Resource Management International Digest, 13 (3), 39 – 42
Sharda, K., and Chatterjee, L. (2011). Configurations of outsourcing firms and organizational performance: A study of outsourcing industry in India. Strategic Outsourcing: An International Journal, 4 (2), 152 – 178
Kobayashi-Hillary, M. (2013). Outsourcing to India: The Offshore Advantage. (Springer e-books.) Berlin, Heidelberg: Springer-Verlag Berlin · Heidelberg.