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Outsourcing: Companies
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There are many tactical reasons why Outsourcing has proven to be the smarter choice for companies today compared to in-house production. Following points encompass few factors which highlight the IT outsourcing benefits.
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Outsourcing is a double-edged sword. If managed properly, it can reap immense benefits; ... there can be unpleasant surprises also in an outsourcing deal. Outsourcing companies need to take care of factors such as back-end loading, cultural misalignment, preferring quality to size of the deal, and ensuring that a contractual benchmarking clause provides for periodic checks and balances regarding pricing and service quality.
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Outsourcing became a popular political issue in the United States during the 2004 U.S. presidential election. The political debate centered on outsourcing's consequences for the domestic U.S. workforce. Democratic U.S. presidential candidate John Kerry criticized U.S. firms that outsource jobs abroad or that incorporate overseas in tax havens to avoid paying their fair share of U.S. taxes during his 2004 campaign, calling such firms "Benedict Arnold corporations". Criticism of outsourcing, from the perspective of U.S. citizens, by-and-large, revolves around the costs associated with transferring control of the labor process to an external entity in another country. A Zogby International poll conducted in August 2004 found that 71% of American voters believed that “outsourcing jobs overseas” hurt the economy while another 62% believed that the U.S. government should impose some legislative action against companies that transfer domestic jobs overseas, possibly in the form of increased taxes on companies that outsource.[23] One given rationale is the extremely high corporate income tax rate in the U.S. relative to other OECD nations [24][25][26], and the peculiar practice of taxing revenues earned outside of U.S. jurisdiction, a very uncommon practice. It is argued that lowering the corporate income tax and ending the double-taxation of foreign-derived revenue (taxed once in the nation where the revenue was raised, and once from the U.S.) will alleviate corporate outsourcing and make the U.S. more attractive to foreign companies. Sarbanes-Oxley has ... been cited as a factor for corporate flight from U.S. jurisdiction.
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ROCHESTER, N.Y., April 7 /PRNewswire/ -- Outsourcing of U.S. jobs to countries like China, India and Mexico where labor costs are much lower is very unpopular. Only 16% of Americans agree with President Bush's economic advisor's comment that it is good for the U.S. economy when companies use less expensive foreign workers to do work previously done in this country. A lopsided 69% to 17% majority would support a special tax on companies that use less expensive foreign workers to replace American workers.
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Outsourcing situations are fraught with personnel turnover -- whether your internal team experiences it or the service provider does. Along the way, some departing folks may believe they have reasons to hold a grudge against your company. Most companies take care to ensure that new and departing employees have completed human resources files with non-disclosure agreements, non-competition agreements, invention and assignment agreements and varous other forms.....
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Outsourcing allows companies to get out of non–core processes by outsourcing them in an efficient and cost effective manner. It enables an organization to focus energy at it’s core-competencies. It goes a long way in making efficient use of labor, capital, technology and resources.
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