Outsourcing - BPO
The Another World: Outsourcing From Inside
Speaking of outsourcing I mean a wider sense than just hiring
of manpower from abroad for some remote work. I can mark out four
types here:
1. Outsourcing itself. A US or Western Europe company (let’s
call it “the West”) hires an employee from Eastern Europe,
Asia, etc., i. e. from a country with more poor economy (let’s
call it “the East”, though it is not quite correct).
This employee performs remotely some part of the work for a company
from the West.
2. A company from the West hires a company from the East that
performs all the work content for an employer and gives the ready
product. In this case an employer appears for a reseller.
3. Not quite outsourcing, but it is related to outsourcing. A
company from the West orders a product or a service at a company
from the East for private use that is much cheaper than an analogous
product/service by a company from the West.
4. Not outsourcing at all. An employee from the East moves to
the West and works at a company.
However we are not interested in the fourth type now. The problem
of outsourcing arouses a lot of discussions. On the one hand –
those who immediately order and perform, on the other hand –
specialists from the West who are being ousted from the labor
market by specialists from the East. And it is the only significant
disadvantage of outsourcing.
Surely, for people who lose their jobs because of foreigners
this disadvantage is very significant, but nevertheless we should
take into account the fact that only in the USA there are 340000
vacancies for programmers. Programmers from the West have two
ways out: to improve their professionalism to the level that no
outsourcer could compete with them or to move to the East and
become outsourcers.
So what can be opposed to this disadvantage? There are quite
a lot of advantages. The most obvious among them is the considerable
disparity between manpower costs in the countries of the West
and in the so-called Third World countries. There are a lot of
reasons; it is a question for economists, but all that comes down
to the fact that the cost of living in these countries is much
lower than in the USA or countries of Western Europe.
On the other hand, the professionalism of programmers, designers,
etc. from not market-economy countries is highly competitive with
the professionalism of Western specialists. The education system
in the Soviet Union (and later – in the countries that became
the USSR’s successors) is considered to be one of the best
in the world; many specialists go to the West to work there, others
are engaged in outsourcing. I am speaking of the countries of
the former Soviet Union, because working with outsourcers from
these countries is more profitable than with their Asian colleagues
and developer from other countries of Eastern Europe. Of course,
the benefit lies in the lowest manpower costs.
Now let’s appeal to the figures. When managers of a software
or web design company plan to have resource to outsourcing, they
usually aim to cut down expenses to 30% and more. I suppose that
starting not only from labor hours, but also technicality, expenses
can be cut down to 50%. These figures may be a little bit different
depending on outsourcer’s geographical situation. As I already
mentioned, if working with such countries as Russia and Ukraine,
the profit gets still more. And it is while the quality is of
the same high level.
Year by year greater and greater number of Western companies
realize the advantages of outsourcing and collaborate with Eastern
companies. As the IDC’s and Meta Group’s research show,
60% of midsized companies resort to outsourcing in IT development
and web design. Forrester Research foretells that within the next
15 years 3.3 millions of jobs and $136 billions will move abroad.
Comparing different types of outsourcing, namely – the first
and the second types, it must be said that the second one makes
more profit since the cost value in this case will be less. The
same reason is for buying a ready product or service by a company
that is situated in Ukraine or Russia. Some companies are engaged
exceptionally in reselling. That means that they find clients,
pass an order to an outsourcer, pass the ready product/service
to a client and get the profit that amounts to 100% and more.
Harking back to the words of some people who tell that outsourcers
“steal” Western specialist’s work, I could say
as follows. Economy controls the situation. It is market.
Dmitrie Highduke,
TheAnotherWorld,
http://theanotherworld.com/
Article Source: http://EzineArticles.com/
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