Sample Geography Paper on Outsourcing

Sample Geography Paper on Outsourcing

Outsourcing refers to the process of assigning company business processes to an external agency with the aim, among others, of enhancing service quality and lowering labor costs. When outsourcing is done to organizations in other countries, it is often referred to as offshoring. We live in an increasingly integrated society. With free movement of goods, services and capital because of globalization, outsourcing has gathered pace as a free movement of service (de Blij and Muller 2010, 453). Some of the functions outsourced by the U.S include call centers, nursing; business process outsourcing that includes mundane functions such as completing accounting paperwork, IT support services, research and development and manufacturing.

India provides a prime destination for outsourcing of IT services on a par with Ireland and competitors like China and Russia lagging behind (Nicholson and Babin, 85). The success of this sector is attributed to a large and educated work force, comparatively low labor costs, widespread fluency in the English language, absence of barriers in setting up businesses, availability of IT infrastructure and reforms in the Indian economy.  The IT support centers are coalesced in clusters in Hyderabad, Chennai, Pune, Bangalore, Delhi, Noida and Gurgaon (Feenstra and Hanson, 18). The clustering of these outsourced service centers helps in the rapid exchange of knowledge, information, and best practices. It is also cheaper to provide infrastructure to a cluster of firms than when they are scattered.

There exist common aspects, relating to outsourcing, that transverse across different industries. One of the main arguments for outsourcing is the reduction in the cost of labor, improving the company’s balance sheet and thus, having a competitive differentiator. This reduction is associated with a loss of jobs, reducing the consuming power of the market force. Prolonged outsourcing will also result in job disruption and wage stagnation due to destabilization of demand and supply in developed economies. When highly skilled and less expensive labor becomes available in other regions around the world, the competitive advantage and negotiating power of the American worker is diminished, resulting in wage stagnation. It has been argued that highly skilled jobs will always remain a reserve of the developed countries (Roberts 2010, 86). However, a better education system, technological knowhow, better access to ideas and migration of workers will result in the availability of highly specialized services in the developing countries. Based on the same argument that was used to outsource low skilled repetitive services to India, the same firms would not continue paying a higher fee for the highly skilled services.

One of the sectors that is bound to suffer due to outsourcing is education. When a certain criterion of jobs is outsourced, to say India, the result is that students are likely to shun the same courses in school. One area that has witnessed this impact is computer science and engineering. Enrolment in computer science and engineering was down 23 percent in 2004 (Roberts 2010, 86). This threatens the country’s leadership in technology and innovation. Furthermore, some companies have outsourced their research and development functions to India. This is a disturbing development as it is only a matter of time before India is recognized as the hub of research and development at the expense of the United States.

The cheap labor in India or China often comes with oppression of workers, weak environmental and labor laws, non-existent workers’ unions, and limited consideration for health and safety. Outsourcing is an unethical way for companies to avoid paying the cost of the social wellbeing that has taken generations to be entrenched in employment in the United States.  In counting the differentiating elements that make outsourcing a viable business option, it is important to consider the socio-economic factors that have not been quantified in the process of making a quick saving.

 

Works Cited

De Blij, Harm, and Peter O. Muller. Geography: realms, regions, and concepts. 14th ed. Hoboken, NJ: Wiley, 2010. Print.

Roberts, Paul Craig. War of the worlds: how the economy was lost. Edinburgh: AK, 2010. Print.

Feenstra, Robert C., and Gordon H. Hanson. Globalization, outsourcing, and wage inequality. Cambridge, MA: National Bureau of Economic Research, 1996. Print.