BPO: Outsourcing to a Foreign Country

The pressures of making a profit are shared by every company or corporation around the world. These pressures are involved and impact practically every decision in the company from the Board of Directors down to the low-level managers. A cost-effective decision that has been popular, as well as controversial, has been the idea of outsourcing certain departments and sections of Entrepreneur Success Stories 2019 operations to another country. Companies continue to take this route because of the low costs of labor in other underdeveloped areas of the world. However, a fast growing trend has been for companies to use BPO, or business-process outsourcing, which sends sections of business such as accounting, HR, supply chain, and call centers, overseas and to other continents (Schwartz). This new trend of BPO has impacts, both positive and negative, on the business itself, American jobs, and ultimately the consumer.
For business, a decision to outsource parts of their business-process is made to achieve a win-win situation, which includes cutting costs while still receiving, in most cases, first class service (Gibson). This can be done because BPO has been used in parts of the world where low-cost labor can still be found and the number of skilled business workers in these areas has increased. Many experts predict that BPO will grow at a compound annual rate of 10.9 percent in the coming years. This would mean global BPO will grow to close to one trillion U.S. Dollars in sales within the next 5 years (Gibson). However, there are a few negatives that go along with the advantages. Starting up at an offshore location can take a few years to get going and completely stabilized (Gibson). This process is slowed by tasks like finding the right skilled workers, gaining awareness and acceptance from customers back home, and possibly the governance of the new host country (Schwartz). Also, if the outsourcing project fails or is not running as planned, a company may have to choose to abandon the project. This is the huge risk of outsourcing, which could end up resulting in millions of dollars of sunk costs.
Another aspect affected by a company’s decision to outsource is the job situation back on the home front. The idea of a corporation outsourcing a section of their business, or even building a whole new branch of operations overseas, sparks the argument of American’s losing their jobs. This argument is supported by the numbers; 6.5 million outsourced jobs existed in 1983, which is now up to over 10 million jobs today, and an estimated 3.3 million is expected to join in the next 15 years (Taillon). This can be eye-opening, especially for a country which has just gone through a recession and has an unemployment rate up close to 10%. However, these numbers do not look as bad when the idea of “insourced jobs” is brought up (Taillon). With the U.S. being the biggest consumer in the world, many companies from other parts of the world find it strategically cost effective to move some of their jobs to the United States. Many American citizens are unaware of the high numbers of jobs gained through this process. The number of jobs obtained from other countries was around 2.5 million in 1983, which has increased to over 6.5 today (Taillon). When this concept is brought into view, the 10 million jobs lost to outsourcing starts to not look as shocking as once thought.
Lastly, the U.S. consumer’s buying trends and spending are affected by a Bbc News Videos‘s decision to outsource. Many Americans in the past perceived outsourcing and buying products from overseas as unpatriotic; however, this thought process has seemed to fade in the past few years. Now, the U.S. consumer enjoys low-costs at Wal-Mart, reliable foreign-made cars, and highly technological European cell phones, which basically all either come from overseas or are made in the U.S. by a foreign company (Taillon). This shift has brought nothing but benefits to the U.S. consumer and shows no signs of turning around. Now, as more complex projects are being outsourced, such as Accounting, Americans are showing more reliance towards the work being done overseas (Schwartz). This confidence in business-process services can mainly be connected with the dependability and trustworthiness shown towards foreign made products of today.
Whether one believes outsourcing has more positive effects or negative, the fact remains that the trend will certainly continue to grow. This is especially true for BPO, as more and more companies are sending sections of business overseas. Many think that as business processes, such as accounting, continue to be outsourced, that application outsourcing will start to increase along with it (Schwartz). However, what lies in the future has yet to be seen and will show itself in the next few decades as business trends move forward.

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