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Does Outsourcing Really Contribute To Job Loss?

Outsourcing
Outsourcing
Photo by Uriel Sinai/Getty Images

The economy is still reeling under the pressure of recession and no matter how hard the economists are trying to dispel the fear about recession, people have not still recovered completely from its devastating impact. Job loss, foreclosure, bankruptcy … we have all become familiar with these terms and what they imply in the broader economic sense. Therefore, it is no wonder that people jump out of their skin whenever they hear the term ‘Outsourcing’.

‘Outsourcing’ – the very mention of the term sounds like blaspheme. There are some people and some politicians too who seem dead against the very concept of outsourcing. To them ‘Outsourcing’ means sending jobs overseas. However, there is a grain of truth in this statement. Outsourcing just for the sake of Outsourcing is a bad idea and we must unequivocally denounce it as it is detrimental to the growth and prospect of a business organization.

To get a clear idea of things, we need to look beyond the obvious. First let us try to understand what Outsourcing is all about.

Say you are an aspiring business owner and you are planning to kick start a new business. So, you have done extensive research and after much planning and rough works, you decide that you will be selling computer parts in some place of the United States. Now, the idea seems good and after making some calculations, you figure it out that it would cost you nearly $100 for manufacturing a spare part for a machine. Too costly, too bad. It is almost impossible to survive if the manufacturing cost remains this high. So, you take a look around and find that if you can set up a manufacturing plant in China or Vietnam or in India, the production cost can be slashed massively. Now, the question is what you are going to do? If you decide to set a plant in an oversea country, you are actually rooting for outsourcing.

Now, the problem is if you don’t acquiesce to outsource the manufacturing segment of your spare parts manufacturing business, your business will never be able to compete with other companies on a global scale.

Moreover, outsourcing is not necessarily evil. What is all the more important is that the very concept of business and marketing is itself dependant on outsourcing. For example, a car manufacturing company like Toyata never gets involved in the manufacturing of small car parts. Rather what they do, they outsource that part to a small company so that Toyata can concentrate on product development and other aspects of the business that actually matter. Were it not for the outsourcing, bank customers would have to wait for days, if not for weeks to be able to get solution for the problem that they might have been facing. Thanks to overseas Call Centers, banks have managed to free up their time. They now get more time to improve the way a bank function. This is having a direct impact on the customer happiness index.

So, as it obvious Outsourcing does help a business reduce production cost [as pointed out by leading outsourcing blog - Blog.eBusinessBPO], make it nimble to compete with other companies and also to stay in good shape.

Now, people would say what about the job loss? Well, the picture is not that grim and dark as it appears to be. Say for example, you are dead against the concept of outsourcing. So, you are going to manufacture the products by local people and this will lead to a steep rise of the production cost. If production cost increases, the selling price will also increasing and if the selling price is too high, no one is going to buy your products. This is as simple as that. So, the only way you can stop Outsourcing is by putting an embargo on International business and by keeping the doors shut for foreign players.

So, if you are happy with this, you can go ahead and start protesting against Outsourcing but if you want to be a part of the international market, you need to embrace the concept of outsourcing and try to figure out how to make the most of this outsourcing thing.