The Advantages and Disadvantages of Offshore Outsourcing
With the changing global economy, and the excessive costs associated with keeping an in-house staff for secondary functions, many of today’s small businesses and corporations are outsourcing the production of goods and services to foreign firms in an effort to cut costs. While many critics argue that this can devastate local economies by cutting jobs at home, success is often a balancing act between meeting customer and community demands and also maximizing profits.
While there are certainly ethical decisions to be made for many of these businesses, there are a number of pros and cons to offshore outsourcing. While many criticize the act of outsourcing production by large corporations, there are a number of US firms that continue to provide outsourcing and remote service jobs for small businesses in the US that cannot afford to maintain a large full time staff and also foreign businesses as well.
One of the biggest benefits of global outsourcing is that it allows for increased efficiency within larger organizations. Although a number of less-skilled jobs are often lost to overseas production facilities, the increased efficiency allows these organizations to create more skilled positions and implement improved strategic plans. In addition, the benefit for many consumers is that they can enjoy decreased prices created by increased levels of efficiency, which can in turn promote greater economic growth. The drive for lower prices and the increased demands of consumers for businesses to compete is one of the largest factors that drive many corporations to move production to offshore facilities.
For these large corporations, one of the downfalls of outsourcing that has the potential to do the most damage is decreased quality control, minimal product development and improvement, and lower quality materials and workmanship that go into products. In the US, and in many other countries as well, poor quality products have the potential for increased liability and lawsuits, as well as exposure by consumers to certain materials that can be deadly.
Another one of the biggest disadvantages of offshore outsourcing that is particularly detrimental to smaller companies, is the communication barrier that often exists between foreign countries of production where another language is spoken and companies in other countries that speak a different native language. However, increases in technology are working to reduce this barrier and make global communication possible for everyone.