Question

I need a conclusion for outsourcing and the impact that it has both positive and negative on the following countries: Brazil, China, India and US (yes, only on these countries). Please make it as long as you can. Thank you in advance.

Answer 1

Outsourcing has many benefits during globalization as it gives the flexibility to multi national operations to outsource the functions as per cost benefits and availability of skills. It gives economies of scale benefits as the companies can base their operations in regions which are suitable in terms of resources and infrastructure. Outsourcing existed since many years with availability of raw materials giving competitive advantage of manufacturing in certain nations. With use of technology it has become easier and more cost effective to coordinate and manage the operations on worldwide basis. The outsourcing in technology sector has led to outsourcing of jobs and human resource skills with software engineering skills, communication and availability of educated workforce has given rise to opportunities in certain countries like Brazil, China and India. These countries with conditions favourable for business with US companies has started the trend of outsourcing of jobs from US corporations in Brazil, India and China. There are pros and cons of outsourcing operations as the US companies invests in training of the workforce and giving competitive compensation and wages to the employees which is still lesser than costs for similar jobs in their home countries. It has also given the advantage to the multinational corporations to diversify the risks and improve efficiency of their operations with lower operational costs and resources. This translates to further scope for growth of business and improving the performance of core business areas. This has influenced the countries like India, China and Brazil with establishing a global work culture and more professional work force. It has led to economic growth and increase in jobs. The purchasing capacity has increased with more organized jobs and compensation structure. There is more scope for sale of multinational goods and brands with opening of market conditions. There is increase in competitiveness and productivity of workforce with awareness of global work practices. The negative impact of outsourcing is in terms of effect of global market conditions on job market and dependency on certain sectors and companies. There is  concentration of majority of jobs in specific sectors increasing the risk of external environment changes on earnings and economic growth. The laws and regulations of each country and change in policies with government also impacts the performance of the multinational companies and uncertainty in business conditions. The domestic companies in these countries may find difficult to compete and lack similar growth opportunities compared to multinational companies. US population faces the challenge of outsourcing of the jobs to other countries for cost and skills benefits and risk of unemployment.