Global outsourcing involves a company outsourcing services or projects to a third party in a foreign location. The third party is usually a firm that employs workers or the third party is an individual who offers various services. Employers will generally hire the third party to complete a whole project or some aspect of the project. Global outsourcing has both benefits and risks. However, global outsourcing is on an upward trend.
Why global outsourcing is on an upward trend
Global outsourcing is becoming an increasing trend among businesses because of various factors. One of the leading factors is the comparative condition of richer economies in the world market. Employers are able to find employees in other countries that will do much more work for the same price as an employee in wealthier countries. A $200 budget might buy a company a week or two worth of work from an employee in India but not nearly as much in a richer country. This does not necessarily mean lower quality work because the dollar goes much further for many employees working in foreign countries.
Another factor for an upward trend in global outsourcing is that U.S. dominance over the marketplace has made English the de-facto language of the business world. For many people in countries around the world, learning English is an essential to having success. Thus, this allows employers to communicate with employees from different countries through English.
Furthermore, the recent economic recessions and hard times has forced many companies to look for cheaper alternatives for completing work. Global outsourcing provides the means for companies to save more money. Companies do not have to deal with overhead costs associated with hiring, managing, and training employees. Additionally, employees and employers are usually in different time zones. Thus, this allows companies to get work done faster. An employer can essentially work a normal day and then have the work continued overnight as someone works on it in a different time zone.
One last factor for the increase of global outsourcing is new technology in methods of communication. Today employers can use many different methods to communicate with foreign workers. The increase of use in video chat has given a face to employees, making employers more comfortable working with them. Additionally, Skype and other forms of live communication have enabled easy and fast communication across continents. As foreign nations continue to build their IT infrastructure, these methods of communication and employee availability will increase.
How to mitigate global outsourcing risks
There are obvious risks associated with global outsourcing; however, there are ways to mitigate the risks involved to ensure a smooth work relationship and high-quality results.
One of the more notable risks that people associate with global outsourcing is the quality of work. Most people associate cheaper employee costs with less quality work. This may be true in some cases, but there are ways to mitigate the risk in order to get high-quality work. Employers should always look at customer referrals and reviews of employees before hiring. If the employee does poor work, then the reviews and comments from other employers will highlight it. Furthermore, it may be wise for employers to use reputable, well-established companies to find workers. Since these companies have a reputation to protect, they will more than likely provide the employer with employees who perform high-quality work.
Another risk that dissuades people from global outsourcing is a perception that there will be communication barriers between the workers and the employers. If there is a communication barrier, it is often minimal and can be avoided in most situations. The risk can be mitigated by using employees from countries that commonly use English such as India and the Philippines. Furthermore, by structuring requirements as concise and clear as possible, it will reduce the probability of an employee-employer communication problem. Additionally, since most employers and employees will reside in different time zones, it is critical that the employer responds to employee inquiries and statements as soon as possible. It is also advised to create a time where both the employer and employee can communicate live. This is essential to maintain a strong communication relationship.
The business and personal decisions involved
Employers must weigh multiple criteria when deciding to outsource work to employees on a global scale. Similarly, once the decision is made to outsource, further factors must be considered in order to accurately and effectively get the services that the company is looking for. The following list describes some of the business and personal decisions that are involved with deciding and ultimately executing global outsourcing.
Numbers: An employer must consider the scope of the services that they will be outsourcing. Next, they must establish a budget that will accurately portray the funds necessary to meet the goals that the organization has set in place for the project. The employer should then compare the services that they will receive for the allotted budget from outsourcing globally and from other methods. If the comparison results in global outsourcing being the most financially beneficial, the employer should proceed with shopping around the market to find the best candidates possible for the budget.
Employees– Perspective employers interested in considering global outsourcing must consider the decision of whether or not they want to essentially deal with a faceless employee. Outsourcing communication primarily uses faceless methods such as email. This can make employers feel uncomfortable, as many employers prefer face-to-face communication where they can read body language. If employers can deal with faceless employees, they should also make sure to give the most detailed and clear instructions possible when giving project requirements and expectations.
Location- Employers must consider what location to outsource services to. Global outsourcing can be found in many different parts of the world from South America to Asia. Overall, Employers should always stress for the best deal and talent possible over location. However, when given a choice, the employer should hire from countries where English plays a fairly large role in the culture. This will prevent many problems of communication between the employer and employee.