What you need to know about the promises and perils of outsourcing

Outsourcing is almost certain to remain as permanent a phenomenon as it is controversial. For all the debate of its net effect on jobs and the economy, advances in technology have made it very easy for companies, and even individuals now, to take advantage of its potential opportunities and savings. This makes it more important than ever to understand its changing face and be prepared for whatever it brings.

The changing face of outsourcing
In the past, overseas outsourcing, sometimes referred to as offshoring, was almost exclusively the reserve of big corporations building factories overseas to manufacture products while tapping cheap, mostly unskilled labor. However, it has now expanded into much more skilled labor and other work that was not traditionally outsourced in the past to include clerical jobs.

The driving force behind this new type of outsourcing is advances in technology and services. For the first time in human history, it is possible to communicate and exchange products and ideas across the world instantly and cheaply. Computers and the internet make it practical to collaborate between continents and take advantage of labor wherever it may be.outsourcing

New agencies have also made outsourcing more practical and popular. Companies can now easily utilize firms that specialize in services such as engineering, accounting or whatever they need. When done right, this process can help a company cut cost as well as become a lot more efficient and flexible. With stiff competition, many companies may be forced to take the outsourcing route regardless of their level of enthusiasm for it.

The little guy
Another distinguishing character of the new outsourcing the world is seeing is the ability for almost anyone to take advantage of it. Someone in the rural US can potentially make an order to a factory in China or hire a designer in India.

The opportunities for outsourcing are most apparent to those needing non-physical goods. For example, someone needing help building a website can easily choose from individuals and companies across the world on sites like Freelancer. The person ordering frequently has no idea where or by whom the labor is being performed, and it most likely does not make any practical difference regardless.

Limits on new outsourcing
Outsourcing always has disadvantages such as the need to share information, dealing with different languages, cultures, time zones and the like. With outsourcing of more skilled labor, a further complication is its availability and costs. Lower educational levels overseas sometimes limit the supply of people with the right skills, and hiring overseas may not be significantly cheaper than domestic hiring when all costs are computed.

Also, a company is made up of individuals and can be thought of as a kind of a living entity. When not handled properly, outsourcing may result in some of a company’s best people, and future, being lost.

For better or for worse
Various factors, to include fear of change and losing jobs, have given outsourcing a bad image in the minds of many. Those who support it see it as a way to bring greater economic efficiency to companies. They argue this will lead to new and better products, services, lower prices, more development and eventually more economic growth and jobs for everyone. On the other hand, others see it as a force destroying higher paying jobs in developed countries and pushing down wages to the point nobody will be able to buy the products being produced.

As with most things, the truth probably lies somewhere in between, and it will bring both opportunities and pain. What can be virtually certain is that greater outsourcing is here to stay. Technology and an increasingly integrated world have made it a force that will be almost impossible to stop.

The future
In an increasing competitive and integrated world, more companies will shed operations that are not part of their core business, and that can be performed more cheaply outside, to others. Firms will be more specialized, and lines will be increasingly blurred. For example, a company relying on cloud computing for its needs will likely be using labor and equipment located in different nations or continents without even being aware of it. Both individuals and companies will have to learn to compete globally and both will be able to reap the rewards while they face the risks. Everyone needs to be prepared for what it will bring and ready to find solutions to its challenges.