Example Of Global Outsourcing Essay

Major Decisions made by Firms in Global Outsourcing

Organizations have been outsourcing services and products for several decades; however, until recently, the level of global outsourcing has increased significantly due to high levels of global business competitiveness (Halvey & Melby 2012). This has compelled various organizations to outsource certain services and products in order to increase their competitive advantage (Halvey & Melby 2012). There are certain decisions that have to be made by organizations when undertaking global outsourcing, they include: Quality, ability to hire and retain employees, global events and company perception.

How Firms decide whether they should engage in Global outsourcing

Taking quality into consideration, a firm may decide to outsource experts in a specific field of operation especially when face with a shortfall of such expertise for instance, an IT expert (Shacklett, 2013). Additionally, firms tend to consider their capacity to hire and retain highly skilled employees; this is due to the fact that such skilled employees may be in high demand and present a challenge to hire and retain. However, the need for high quality service provision may also be applied to determine whether or not a firm outsources such experts. Moreover, outsourcing may increase a firm’s presence in the global business environment. The need for a firm to increase its presence in a certain field of service or product provision is a great determinant of whether or not it should outsource an expert in that field (Shacklett, 2013). Firms operating in countries characterized by high levels of unemployment may be subjected to negative perception when they outsource workers. An awareness of such perception and its impact on the firm may also determine whether or not a firm can engage in global outsourcing.

Host Countries Where US Outsources its IT Experts and Associated Risks

The major host countries where a majority of US firms outsources their IT experts are India and China. Outsourcing to China is majorly for purposes of IT consultants in processes such as Big Data management, IT in manufacturing and communication IT. Similarly, IT experts from India may give consultative services in Big Data management as well as IT in manufacturing.
Outsourcing IT experts in China has been associated with various risks; one of these risks is that China has a high rate of unemployment and has its labor characterized by cheap labor. This has been perceived negatively by IT experts and the general populace of the United States; thus, tend to create a negative image on the company (Eltschinger, 2014). Additionally, China and US are major rivals in the IT industry, this means that outsourcing IT experts from China would lead to increased risks of data leakage to Chinese IT companies (Eltschinger, 2014). Similarly, outsourcing IT experts from India may subject IT companies in the US to threats of confidential data leakage to rival IT companies in India. Indian IT experts also tend to be quite expensive as compared to IT experts from China, thus creates risk of increased operational costs (Eltschinger, 2014).

Actions taken by Firms to Achieve Excellence in Global Outsourcing

Generally, firms should outsource experts depending on their need for outsourced services or products (Shacklett, 2013). In this regard, it is crucial that firms/organizations undertake take needs assessments to identify areas of weakness and how they can be improved. This will determine whether the firm should or should not outsource its services. Additionally, firms should determine whether they have adequate resource to hire and maintain outsourced experts. This ensures that challenges that may arise due to resource utilization when an expert is outsourced are reduced or prevented.

References

Eltschinger, C. (2014). Source code China the new global hub of IT outsourcing. Hoboken, N.J.: John Wiley & Sons.
Halvey, J., & Melby, B. (2012). Business process outsourcing process, strategies, and contracts (2nd ed.). Hoboken, N.J.: John Wiley & Sons.
Shacklett, M. (2013). 10 things to consider when you outsource IT. Retrieved January 29, 2015, from http://www.techrepublic.com/blog/10-things/10-things-to-consider-when-you-outsource-it/