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Outsourcing of Work is No Longer an All or None Choice in Business and Services

Jul 15, 2008
Outsourcing - that is to send the work of your company overseas seem to be be scourge of our times . It may seem that everything we buy now seems to come from "somewhere else". Nothing seems to be made in the good old USA anymore. The concern is that although the goods are inexpensive and "so reasonable" at your local big box store, the question is - in the future will your grandchildren have an income to afford anything at all?

Many businesses are now in a position of choosing for their own survival whether or not to outsource? It's either get on the bandwagon or have no business or employees whatsoever. The concept is that something of something is better than nothing of anything or nothing whatsoever.

Consumers it seems are somewhat some sighted or even fickle. When it comes to price comparisons even good old Levy Straus jeans could not compete with cheaper imports. Quality like anything, even with perceived prestige items has their price points. Now even Levy jeans are made offshore - and a lot of American workers lost their jobs.

Outsourcing can be said to be the practice of using outside firms to handle work that was normally performed within a company. It used to be that work might have been outsourced by American companies to other companies within the US to reduce costs or get things done in a hurry during rush time periods. Often outside firms did not have the same cost constraints - either on workers wages, or other costs such as property or factory costs, and could as such do the job cheaper. In other cases, the hands were just not available at head office or factory for specific work to be pumped out - hence the work might be contracted out elsewhere. In the case of smaller firms they may not have had the resources, staff or equipment for certain tasks. Overall, outsourcing could get products or components of products produced at less overall costs with minimal investment or reduced management effort and time. Overall in these situations outsourcing was a wise choice.

The difference now is that the outsourced work is being half way around the world - perhaps in Asia - China and Vietnam for example , or in the case of services - such as your banking , travel or computer tech support services - India.

Still outsourcing is not an all or nothing choice. On top of that with fuel price increases the rules are going to change overall yet again.

The basic rule is that for simple and mundane, routine tasks outsourcing makes sense. For example why a highly trained and certified accountant valuable time and energy should be applied to completing routine tax returns. His or her time is better spent than to complete these mundane tasks during the spring time tax rush. Better that these tasks be performed off shore. Sure levels of quality and consistency must be maintained. Such systems and procedures are now fairly standard. The highly trained accountant can apply his skills to better ends - analysis of customer's accounts on an ongoing basis, and then recommending specific courses of actions as well as specific products and investments. This way the client is better served and serviced throughout the year with the business and tax supported in a superior, ongoing and timely manner.

The rules of outsourcing are fluid and are changing once again with increases in the price of fuel and transportation. For example manufacturing in Asia was based on lower wages. Products or components are shipped between a numbers of widely scattered places of production. Then the completed products or components were shipped long distances from Asia by container ship to America. With the increased costs of oil and transportation the mix has changed where the American suppliers, who are closer to home, and often to raw materials, are in a much more competitive situation than before.

Services provided over communication lines, whether they be via telephone lines or the internet currently fall out of this mix, so they are not affected.

In the end outsourcing is neither good nor bad. It's not a case of does a company outsource 100 or not. The answer is obtained via analysis. What are current market trends? What makes sense? What should be outsourced and what not? What are the strengths and weaknesses of each particular firm and business? It's no longer an all or non choice when it comes to outsourcing.
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