Outsourcing Issues in European and American Organizations

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MGMT 315 Unit 4 DB

The term outsourcing refers to exploitation of human resources from outside an organization to handle tasks that were originally handled internally within an organization. It occurs when the management of a business results in strategic moves deemed appropriate for the optimization of business processes with the chief goal of saving and reducing costs (Abramovsky, Griffith, & Sako, 2004, p.3).

Currently, most European and American organizations are heavily outsourcing part of their business tasks to Asian countries. Despite the existence of large human resource base, the labor is cheap with an approximation of about 50% in cost of savings.

This helps in executing similar tasks with the same magnitude of quality internally within the organization in question. Call centers operations are among the tasks that have been widely outsourced. Such a move faces many moral and legal critics amid the enormous anticipated benefits to the organization.

The issues of outsourcing are sensitive, as they have the capacity to prompt for a myriad of protests, characterized by hostility in its coverage in the media. Worse, they can invite industrial actions.

If they hold the issues loosely, chances are the business seeking to outsource their services would suffer from dwindled quality for their products, make their brands weak and perhaps incite customers to hold the credibility of the organization with suspicion (Global Change, 2008, Para. 4). However, if handled well, the benefits are enormous. Outsourcing 120 call centre jobs to Asia, consequently, would mean 50% saving on cost with a further benefit of creating 120 such job opportunities in Asia.

In as much as this is crucial for protection of the remaining jobs within the home country, one anticipates moral regress from the workers’ union by ensuring competitiveness of the organization. They have argued in the recent past that the services of the outsourcing-call centre of the union in Asia have served to destroy the home country jobs immorally.

The creation of such jobs in overseas countries has a negative impact on the Asian communities since they pay remarkably little resulting to the exploitation of the poor. Although this may seem as a strong argument against outsourcing call centers to Asia, the benefits to the Asian business and economy are immeasurable.

Money limited to these nations serves as means to hike the purchasing power of the local commodities with the nations amongst the citizens. Although, the pay is little in relation to the richer nations that outsource their call center services, the cost of living in poorer nations is low. Therefore, people can afford a comfortable living standard.

Perhaps the most influential factor to put into consideration while choosing to relocate the call centre services to Asian countries such India is the legal considerations. In fact, majority of organizations considers relocation of their software and call centers from nations like the United Kingdom and the USA to India (Global Change, 2008, Para. 10). However, this move demands a fair deal of attention.

Outsourcing brings two nations together, which in more situations than not, have different legal contracting terms. As a way of example, in India, courts have endorsed the necessity for choice of appropriate laws (Abramovsky, Griffith, & Sako, 2004, p.3). Selecting choice of law in call centre outsourcing contracts consequently, demands that the selected law to have full agreement with the Indian courts.

Legal issues also arise due to the existence of nonconformity in the formulation of taxation laws between the western countries and the Asian nations. However, nations such as India have adjusted taxation laws through various acts to make them compliant with the requirements of the world trade organizations.

References

Abramovsky, L., Griffith, R., & Sako, M. (2004). Off Shoring Business Services and Its Impacts on UK Economy. London: Advanced Institute of Management Research (AIM).

Global Change. (2008). The Future of Outsourcing- Impact On Jobs: Growth of India and China, Emerging Markets Threat and Opportunities. Web.

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Outsourcing Issues in European and American Organizations

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