While some Americans praise offshore outsourcing for giving them low cost products as a result of cheap labor , their companies should consider refraining from this practice for contributing to the depression of the country's Economy by leading to : loss of jobs , poor service by the service provider company , loss of business process control by the client company , low quality services and insecurity.
Outsourcing refers to the transfer of the management of a business process to an external service provider (Owuor 2). The company that subcontracts the business process is called the client while the company that manages the business process on behalf of the client is called the provider (Owuor 2) . Offshore outsourcing has been practiced by many companies in the U.S. with the intention of reducing their production costs by transferring jobs to countries that pay low wages (Owuor 3).
There are many disadvantages attached to this practice in the U.S. Firstly , it has led to the loss of jobs since the activities which were performed in America have now been transferred to other countries as a result of offshore outsourcing (Owuor 6). This is evidenced by Harrop in her writing in which she discusses the threats posed to workers in the United States of America. She believes that the H-1B program has led to the transfer of about forty million professional jobs from U.S. to other countries like India and Pakistan. She notes that most of the visa applicants under the this arrangement are outsourcing companies such as Wipro Technologies of India and Accenture of Bermuda (Harrop 8).
Further still , in 2007 an American company named Hershey laid off 600 Americans at the company's only west coast facility in Oakdale, California and consequently transferred the manufacturing of Kisses , Reese's Mounds and other products to Mexico where it hoped to pay lower wages. Harrop additionally notes that outsourcing has led to the depression of the wages of American workers. He argues that in the fiscal year 2005 , the average pay for a computing professional working under this program was $50, 000 with half of them earning less than this amount (Harrop 10). On the other hand , an American IT worker was given this as an entry pay. This clearly shows that Americans working under this program are poorly paid.
Companies in the U.S. have landed into serious problems several times as a result of failure by the provider to provide business because of bankruptcy or even lack of the required labor (Owuor 15). Outsourcing U.S. companies have also lost control over their business processes to the service providers. This is because , managing operation in the service providers by these companies has been challenging due to the long distance of separation between the client and the provider companies which has led difficulties in communication (Owuor 22).
Outsourcing companies in America have also suffered a privacy crisis as well as sabotage to their system access and many more risks as a result of allowing part of their business to be accessible to the provider company (Owuor 24).
Offshore outsourcing in the U.S. has led to a low quality of services. For instance , in the arena of consumers of call centers services. American companies that offer this service have outsourced to countries like India. This has led to poor language features which include poor accents , wrong use of words and phraseology resulting to challenges in understanding call centre agents. (Owuor 28). Outsourcing this service to a distant location has also led to lack of gestures which people can observe when engaged in face to face communication and this has led to misunderstandings or miscommunications. Friedman in his writing " 30 little Turtles" gives his experience in an Indian " accent neutralization class" . in this Indian call centre , the students are trying to suppress their Indian accents so as to take up jobs in other countries such as Canada. Surely, chances of these students suppressing their accent absolutely such that they can come out as Canadians or Americans when they work in the call centers are very slim. This shows that there will ever be the problem of miscommunication.
Employees in the service provider also have a tendency of being less loyal since they aren't part of the real company. This leads to poor services from them (Owuor 32). Security problems have also befallen U.S. companies as a result of offshore outsourcing . Before the companies outsource , they can be held accountable for the actions of their entire staff and therefore answerable for their actions (Owuor 35). After outsourcing , the employees are transferred to the service provider where their official status change. They are indirectly employed by the organization and are also not responsible to it. This causes a serious legal , security and compliance issues (Owuor 36).
A company becomes more prone to Fraud , which is a very serious security issue when outsourcers are involved. For instance, in 2005 , a sophisticated fraud case in which $350,000 was stolen from four Citibank customers by call centre workers was recorded (Owuor 42). These call center workers acquired the secrete passwords to client accounts and migrated the money to their own accounts. These accounts had been opened under fictitious names. The bank did not even unearth the fraud until their American clients informed their customer care representative about account discrepancies (Owuor 42).
Proponents of offshore outsourcing argue that this results to a reduction in prices of products since cheaper labor is used. One proponent cited the price of a VCR about ten years ago. It cost about $200-$300 and he further argues that nowadays a DVD goes for only $100 .(Owuor 44) . He attributes this to outsourcing. Clothes made in china are also very cheap in the U.S. market " but they survive only about a season or two "(Owuor 45). These clothes also shrink and rip easily. This makes Americans to be constantly shopping and this leads them to financial difficulties for spending money on products that don't last for long. Products made in U.S. based industries are of very high quality compared to those from companies acting as providers (Owuor 52). This is because, in the service provider countries , workers rely on very poor hand tools as opposed to workers in the U.S. who rely on very efficient computerized machines which give very high quality output. Their is a popular adage that goes like " cheap is expensive in the long run" . I would urge those Americans supporting offshore outsourcing to think beyond the price.
Its evident that offshore outsourcing is a concept that authorities in the United States of America should re- evaluate since its been realized to have more negative consequences than many appreciate. It has led to loss of jobs as they are shifted to the service provider , poor pay for Americans working for the service provider , mismanagement by the service provider giving the company a bad public image , exposure of a company to a third party making it very vulnerable, low quality products and services , insecurity , and loss of business process control by the client company due to the geographical distance between it and the service provider. These translate to a great harm to the U.S. economy.