Globalization and Outsourcing: How the Industry Evolved Over Time

Both globalization and outsourcing ‘go hand-in-hand’. If you see this from the standpoint of promoting each other and reaping the benefits, then this statement is apt. Had it not been for globalization, workers from around the world who make a living via their talents and skills would be nowhere. Job opportunities started growing and more people were employed. However, these two topics can also spark up fresh controversies.  In the US particularly, the attitude of companies outsourcing work to far-off zones, for saving money, is highly resented upon. There’s a typical dearth of engineers and developers having specialized skills. And by chance they’re found, smaller firms then need to cope with the pressures of competing with high-end organizations like Facebook, or Amazon.

How many changes have been noticed in respect to globalization and outsourcing?

If you see the current market trends, the global economy is witnessing drastic changes and companies too, are in a serious fix about how they must stay in the business. Though IMF and the World have been rendering quality help to several countries to manage the situation, via monetary help or insisting creditor countries to delay interest payments of foreign, and more - yet, a lot needs to be done.

Effects for all to see

Before analyzing the changes that have occurred or mapping the effect, one must see the progress that global outsourcing has done. This includes factors that might have impacted the decision to outsource and how costs and capital outlay can be reduced significantly.

In the US, outsourcing has proved transformational on several levels. Firstly, it helped US firms to tap into the global talent pool, and then save considerable amounts of money; which has thus led to more competition. As per research from Deloitte, almost 58% of organizations that outsourced the software development, managed to better their standards of products and services. Both globalization and outsourcing in the international arena have created multiple careers in several nations that earlier battled poverty and socio-political unrest. But on the flip side, more competition as a result of globalization has caused companies to fight it out with similar talents and consumers.

There’s something called ‘comparative advantage’ that US organizations have been taking advantage of. Companies can offer a plethora of products and services at lesser costs than competitors, after working with vendors who managed with reduced labour costs. Usually, global outsourcing services to India lets businesses rake in profits, since they lessen IT costs and software development. Also, more services can be delivered that benefit customers, and increased revenue for the economy become a reality.

The global ‘outsourcing’ market, on the whole, helps companies to leverage global talents, reduce pressures on the production cycle, and also assists them to respond to heightened pressures to compete. All these are done, without losing the ability to emphasize core business dealing and strategizing.

Industry growth over time rests on multiple considerations

Whether it’s socio-political, cultural, and economic, or ethical - globalization and outsourcing brought noticeable results before the US. In today’s digital era, it makes no sense to be called out simply because of some unethical habits and practices. Consumers will invariably take to social media and spread the word, in a jiffy. Now reputational damage isn’t funny. So, few considerations must be looked into.

First things first, workers’ exploitation is a potent reason circulating outsourcing. Second, companies need to be extra wary about electronic records, IP protection, consumer data, while they’re outsourcing services to India, for example. While different countries have their own set of rules and regulations, but the goal is the same.

Third, often the risk surrounding vendors about whether they’ll manage to meet up to the quality expectations or not is a serious point of concern.

While there are more, one key aspect of concern is also the COVID 19 factor. It wouldn’t be wrong to say that the pandemic has impacted and will also be able to fracture the globalized economy more, in political industries mostly. Global outsourcing services to India may be pulled back significantly.

Most Americans tend to view outsourcing services to India as a serious threat to the job market in the US. Thankfully, the thought is changing, and largely because of the spurt in global technology and outsourcing that has resulted in partnering with developers based in Europe, Asia, Latin America, and so on.