Global outsourcing has been one of the hottest topics of political and social debate over the past several years. Local manufacturing plants and call centers are moved off-shore every day, headed to countries in which the same jobs will be done for a fraction of the cost. This often leaves the working class feeling like they may have no place to work, and corporate executives are blamed for giving away work that a country so badly needs. Unfortunately these views are regularly one-sided, offering only a cynical view of a complex economical and industrial environment.

Outsourcing occurs when a company sees fit to move jobs, be it manufacturing, engineering, technical, or any other form of work, to another country in the interest of saving money. Rapidly developing countries such as China and India can offer many of these services for mere fractions of their cost in the Western world. Certainly, this decision is a trade-off. While the company may save money in manufacturing, it is entirely plausible that the employees will be highly displeased by the decision. There are several facets to this discussion that need to be explored.

Consider yourself the top executive at a major manufacturing corporation. You have a responsibility, not only to your customers, but to your employees as well to remain as profitable as possible. As you generate more profit, you are also able to offer your employees better salaries and greater job security. Off-shore manufacturing offers a way to save your company hundreds of thousands of dollars. What would you do?

Many companies choose to outsource because of the financial incentives. The only problem many will experience is the frustration of employees who will lose their jobs. For others, however, there are significant quality assurance issues. Many off-shore plants can offer low wages because the working conditions are so poor. Employees work in dim light, extreme heat or extreme cold, and with few or no personal hygiene breaks. In this type of environment, quality is sure to decline, and the company will likely have to pay for those mistakes. Even jobs requiring technical expertise can incur quality assurance costs when outsourced. A corporation can never be sure if an off-shore employee’s qualifications have been falsified, or if their training was reputable. If not, jobs will be done and redone, all at the expense of the company.

One possible benefit of outsourcing is the development of new kinds of jobs. During the industrial revolution, employees felt as though their jobs were disappearing, being eaten up by mechanization, and later, by computers. While workers may have no longer been efficient metal stampers, someone needed to maintain the machine which now did the stamping. Outsourcing could provide a similar situation. While workers may no longer be able to provide manufacturing jobs at competitive costs, we will need people to manage international relationships. Outsourcing manufacturing work also places greater value on creative jobs, such as engineering or graphic design. Good project management will continue to draw a high premium for some time.

Local industry, and particularly manufacturing, is in a state of difficult transition. While the change may bring good, we are not likely to see those benefits for several years. In the meantime, employers and employees will be challenged to find ways to keep companies profitable while acting in the best interest of every employee. In some cases, this may mean sacrificing jobs to save costs. In others, the loyalty of an employee has to be priority number one. In any case, we certainly have not seen the last of global outsourcing.

This entry was posted on Thursday, May 10th, 2007 at 9:56 am and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.