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Outsourcing Jobs to Foreign Countries Nowadays many companies face unprecedented pressure created by market. Survive and achieve success only those who organizes his business in the most effective way, achieving reduction of operational charges but saving high quality of the goods and services. One of the forms of the organization of business in modern economy outsourcing jobs. It is the practice that helps companies to solve problems of functioning and development in market economy by reduction of costs, growth of the level of adaptivity to environmental conditions, improvement of quality of production and services, reduction of risk. The Use of outsourcing jobs has received great scope all over the world within last decade, mostly due to rapid development of information technologies.
Outsourcing jobs are an organizational decision, transfer of some business - functions or parts of business - process of the enterprise to foreign partner. The essence of outsourcing jobs consists in distribution of functions of business - system according to a principle I leave to myself only that I can make better than others, I pass the external executor that he makes better than others. (Crismond, ch. 7) At the same time outsourcing jobs define as new strategy of management: Be engaged not in that you can make in the best way and that you can buy most favorably. (Wired Magazine, 15 - 16) The reasons on which companies use outsourcing jobs: The growth of complexity of business - processes; The aspiration to receive the maximal quality of performance of business - functions, but thus to reduce own costs; The opportunity to liberate resources and to concentrate on primary activity of the company. The reality is that in market economy the majority of investors are not competent in certain business especially connected with real manufacture, and make decisions, being guided by several formal criterions. Among them is the specific income on one worker. Accordingly the basic reason for outsourcing jobs is the aspiration of the joint-stock companies to improve its economic parameters. Even Bill Gates, the president of corporation Microsoft, whose products are used in many large outsourcing contracts, not such a long time ago remarked: The specific income on each worker is not difficult to calculate, but it is not ideal parameter of an overall performance of the enterprise.
At the enterprises, where work few experts, probably due to outsourcing jobs, this parameter is high enough. Nevertheless, efficiency level of their work can be lower, than at the companies with a little bit smaller specific income because of the greater number of the personnel which is carrying out all amount of works by own strength ." Also Gates has added, that he does not mean at all, that outsourcing is bad. Outsourcing will receive a wide distribution with the development of the Internet. It will enable the companies to cooperate with foreign organizations as their own divisions cooperate among themselves ." It has been told in 1996, and today, Gates's forecast just is at a stage of practical realization. (Ray, ch. 2) It is possible to refer reduction of the cost price to number of the advantages received from outsourcing jobs. Outsourcer, as a rule, carries out performance of the functions charged to him more cheaply because of narrow specialization and due to a mass effect, achieving it by performing the same operations simultaneously for set of clients. One more positive consequence of specialization is improvement of quality and reliability of performance of the functions assigned on outsourcing jobs as at the decision of similar problems of the company outsourcers have already gained experience and can use the newest technologies and the highly skilled personnel.
Outsourcing also enables to involve customers employees earlier serving performances delegated to outsourcer who well know specificity of the company. However at all advantages there is a number of rather essential disadvantages which set thinking above profitability of outsourcing. First of all, it is necessary to know that outsourcing harms the country in which it is located. Applying this kind of activity, the native land loses essential amount of workplaces that affects its development and development of its economy. The percent of unemployment in the country rapidly increases.
Also it is necessary to take into account that by transfer on outsourcing jobs several important functions at once there is a real risk of information leakage and emerging of the new competitor that will use experience and knowledge of the company that ordered outsourcing. It is possible to lower this risk, by ordering outsourcing of different business aspects to various outsourcers, though it increases costs. Besides paramount value has a fact of finding of diligent partners, that has perfectly recommended themselves in the market of services, and the competent conclusion of contracts with them with fixing all necessary conditions. Other danger is loss of the control over own resources, the discharge of administration from a part of activity of the company owing to what it can make inadequate decisions. The company in case of unexpected refusal of outsourcers services or its bankruptcies which risk always exists can face one trouble necessity of urgently search of new partners or to start to carry out functions independently, earlier performed by outsourcer. There is an absence of necessary knowledge and experience because of durable services of another's experts.
Besides the listed lacks there is a risk of increase of costs and reduction of quality because of outsourcers un conscientiousness. Especially these problems occur at the undeveloped markets. In conditions of absence of the strong competition the outsourcers, having concluded the contract, increase prices and not so carefully to watch after the quality of the performance of work. Such situations happen because outsourcer knows that the client cannot find other supplier of services that means that the outsourcer will be actually a monopolist in the market. Also one of the most essential lacks is weakness of the direct control over all processes. Directors have no opportunity to observe a course of performance of orders as the majority of subordinates are geographically distant and accessible only via electronic and telecommunication channels.
The second and not less serious problem concerns strong dependence on work of accessory manufacturers. If the employed firm fails to complete the ordered deliveries, works, services, will leave business or the factory where manufacture of competitive production will burn down the business appears under the threat of a failure. This uncertainty is aggravated with that accessory manufacturers are situated far they are not under the direct control of the administration. The third reason is the complexity of work with the distant workers as they arent devoted to their work. Employees can have proof sensation of unreliability of their workplaces in connection with the big opportunity of replacement of their activity by contract agreements with the foreign organizations. It is much more difficult to create the rallied collective in modular corporation, and, as a rule, the level of turnover of staff, is higher, than in the organizations of traditional structures.
At each change of a line of production or a market niche the network firm is compelled to reshuffle employees for achievement of an optimum set of qualifications (skill mix). With a view of overcoming some aspects of the insufficient control and increase of an involvement of employees in a common cause it is necessary to use ways of assistance to group work. The main feature of global network corporations is that there is a necessity of heads which are prepared for work in various countries. In spite of the fact that the basic functions of management: planning, organization, leadership, the control do not vary from the location of the company, there are factors of distinction in an environment that is necessary to take into account: - Welfare distinctions between the countries; - Distinctions in economic development; - Differences in the legislation. Also it is necessary to know that the company risks to lose control on too many kinds of activity and to lose a part of own resources and opportunities. In such cases the company will lose kinds of activity which for a long time provided success in the market for it.
Outsourcing is the administrative course at which some part of works is taken out outside, its performance is entrusted to firm, whose specialization is the given kind of activity. One of the reasons of distribution of outsourcing is the complication of business - processes that created unacceptable loading for the company. The company can concentrate on the basic occupation when its burdensome duties are transferred to foreign experts. Thus there are all reasons to hope, that performance of the certain functions by the contractor will be better and cheaper, than at their saving inside the company. However outsourcing jobs are very risky kind of activity and it is favorable only to the manufacturer, but not for the country.
Therefore I think that the government should create such conditions which will make manufacturers to refuse from the purpose of being engaged with outsourcing jobs or try to lower the amount of such jobs. Bibliography: Crismond, Linda F. 1994. Outsourcing from the A/V vendors viewpoint: The dynamics of a new relationship. Library Acquisitions 18: 37581. Ray, Ron L. 1997. Outsourcing technical services: The selection process.
Library Acquisitions 21, no. 4: 4903. Wired Magazine. 7. 08. 1999. Why outsourcing is our friend. 15 - 16
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