Implication of International Outsourcing and Insourcing

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Sewanee University of the South
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In this era of globalization, globalization has been an inevitable aspect of the increased technology and industrialization globally. Merchandises and services can quickly move from one country to another as employees move from one country to another. With the changes in the trade and growth of new businesses, there has been pressure for businesses to increase efficiency to escape uninvited takeovers especially those that were rampant in the 1980s. Therefore, according to some economists outsourcing is a resultant push from changing economic times globally. Notably, insourcing and outsourcing have had serious consequences on the labor market, individual well-being as well as have affected the level of wages accorded to the employee. Moreover, outsourcing has affected the demand for a certain level of jobs as well creating jobs gaps in certain industries.

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The outsourcing and globalization have allowed even developing countries that have access to telecommunication to utilize these online opportunities for employment. However, as Beerepoot, and Hendriks, (2013, p. 832) note such an arrangement has given rise to underemployment. Qualified individuals, even sometimes graduates have been employed in jobs that they are overqualified. Therefore, skills that they attained in school are being wasted as they only use a small percentage of the skills they possess. For instance, one does not need a college degree to work at a call center. In the long run, employees working for the jobs they never trained for and are overly qualified for will result in education mismatch. Sadly, these opportunities are only granted to the urban and educated young people in the developing countries denying other individual leveled playing ground.

The sad bit about such work arrangements is the fact that the opportunities are short-lived without the possibility of future career growth. Such do not challenge the workers to grow in their expertise as there no enough challenges present to motivate an individual to grow. In fact, this outsourcing sector has been criticized for its little value adding activities like transcription. Additionally, the skills required for this offshored jobs are very specific such that they may be hard to replicate in other sectors. Supposedly that jobs is terminated, the workers would be forced to acquire other new skills as they one they had were too narrow and limited in scope. Such a scenario would very easily result in stagnation in ones career. Although at face value it does not look problematic and in fact can be termed as creating employment, in the long run, it can be very detrimental to the economic situation of those in the developing countries. The reduced employability of these individuals due to reduced transferrable skills leaves them as financial dependents who even after long periods of leaving college are not able to live independent lives as highlighted by Beerepoot, and Hendriks, (2013, p. 836). Notably, the employability of a person is dependent on the demand for the skills they possess and how they can remain consistently use their knowledge and skills to meet the demand in both external and internal markets. However, that ability is limited and squeezed from their ability in a gradual and subtle process. With the narrow scope of the job description and limited skilled developed, it becomes inevitable that such outsourced workers cannot attain job security. As job security is tied to ones performance and competence, it is unfortunate it lacks in the outsourcing arrangement.

Despite the reduced employability many other adverse repercussions result from such a settlement. (Oikelome, and Healy, (2007, p. 136), point out the fact that outsourcing propagates racial and gender discrimination and particularly among doctors. Although on paper there are principles, policies, and laws that prohibit discrimination based on racial inclinations of a person, in practice they are still rampant. For example, doctors from minority ethnic groups in the UK are treated lowly from native doctors. These that originate from Pakistan, Bangladesh among other countries are denied opportunities in prestigious institutions of health care as well as end up working in less popular parts of the countries. While that may not seem like discrimination, it is as it does not allow equal opportunities based solely on ones competence and ability to perform their work. Limited exposure will lead to reduced opportunities for growth in the career path for the immigrant doctors. It is sad to note that overseas professionals sometimes have to wait longer and make more applications to rise to a higher grade as suggested by Oikelome and Healy, (2007, p. 138). When doctors who are supposed to ensure improved health care of the natives gets such treatment, it demotivates them and limits their ability to do an excellent job. Taking a very long time for promotion for no apparent reason reduces the morale of the doctors and has a significant implication on their productivity. Additionally, when complaints against doctors who qualified from the UK were presented to the management, it was seen that stern actions were taken against them including termination. However, the management was more lenient when dealing with professionals who schooled in the UK. Such racial prejudices can affect the workability of the employees as they might stay in fear of the security of their jobs lest something subjective is said against them. While this has been the case for the doctors, I tend to believe it is also manifest in other professionals as matters of ethnicity are still prevalent in this century. Some individuals work overseas but after some time prefer to get back to their native countries where the environment is familiar, and stereotypes are not as prevalent. It is also sad that some human resource managers do not factor in matters of discrimination when they send expatriates to work in other nations. The case is worse when a person from developing countries moves to developed countries and not vice versa.

Additionally, international outsourcing promotes gender inequalities in diverse ways. Unless the working opportunities are online which are few, the physical movement of women to work in other countries is limited. Most cultures expect the women to bring up the children while working in the native countries as pointed out by Standing, (1999 pp.588). Even when opportunities present itself to work in other countries, women may not be able to seize that opportunity as the motherly responsibilities hold them back. Sometimes men who are husbands leave to work as expatriates, and when life becomes unbearable and adjusting become a challenge, the women are forced to take up any job to fend for the family. Further, the physical separation of families may take a toll on the women who are left to bring up kids on their own as they remain behind. The patriarchal ideologies that are still predominant in low-income countries limit the number of women who can join the workforce. Thus, women are left with few options on the kind of jobs that they can take as noted by Standing, (1999 pp.587). Additionally, women have been affected by polarization in that most men possess the progressive skills and they can get time and resources to upgrade their skills portfolio. Most women, on the other hand, have skills that seem static and thus leaving them at a disadvantaged position. When an opportunity to take up new skills and knowledge presents itself, men are likely to prioritize themselves over the women, and when employment opportunities are presented they will also seize them. Thus women have reduced competence compared to their male counterparts as suggested by Oikelome, and Healy, (2007, pp.146). Essentially, international outsourcing enhances gender inequalities placing women as inferiors and subject to male dominance and social limitations.

Consequently, insourcing and outsourcing have affected the wage rates and the labor unions in a significant manner. Apparently, it 's hard to regulate the minimum wages across national borders. Different countries have different legal structures that control the labor market, and as such, if people from different countries are involved in a business transaction, there would be a need to have a harmonized system that regulates the operation. However, such is not possible in the meantime especially for online service delivery as the transaction may not even be traceable. Thus the process is left to the controls of the demand and supply forces to determine how the prices will be set. If the workforce is from low-income countries, especially third world, exploitation from employers from developed countries is almost guaranteed. Many individuals will not have an alternative other than to pick the job instead of remaining jobless. In any case, the supply of the labor is too high in third world countries compared to its demand and thus price increment not so prioritized. Moreover, the same situation happens to the immigrant workers who take low-wage jobs that the natives have rejected. Because of a lack of all necessary skills in a foreign land coupled with racial prejudices, the immigrant workers are forced to take up the job. In fact, the wage concept has remained a common concern for humanitarians when the multinationals start companies in countries where cheap labor is available like some African or Indian countries only to pay the workers peanuts (Taylor, and Bain, 2005, p170). Some of the companies engage in child labor in their pursuit of success and seeking to make use of the available cheap labor (Bradley, Erickson, Stephenson and Williams, 2000, p.19).

On the other hand, international outsourcing has brought significant benefits in the industry of production of goods and service delivery. Because outsourcing has been necessitated by the demand for high-efficiency methods of production, job specialization has been inevitable. Individuals or companies are concentrating on activities that they are well skilled in and are efficient. Specialization reduces costs associated with inefficiencies in the production process. Further, when organizations outsource, it allows them to concentrate on its primary goals of existence as highlighted by Alexandrova, 2009, p.2. For instance, instead of purchasing raw materials and machines for branding and preparing workplace brochures, a company may give that contract to a specialized graphic designer who possesses all the necessary skills to produce a high-quality product. During the preparation of the brochure, the company can concentrate on making higher profits, increasing market penetration and creating new customers. Success in the primary activity will enable the firm to acquire enough profits to outsource the service and remain with enough profit. Additionally, such an arrangement will ensure time, which is a scarce resource is used the best way possible and the minimum is used to realize the greatest return. In fact, international outsourcing can be cheaper because one can access areas where labor costs are higher and the cost of that service being less expensive than when done in the organization. For instance, through international outsourcing, a company can hire transcribers from developing countries to do the job without incurring an extra cost. In so doing, there has been the creation of employment as well reduced the cost of production.

In conclusion, the implications of international outsourcing and insourcing are both short term and long term. In the short term, such an approach can increase efficiency and reduce costs by allowing the company to concentrate on its primary objectives. However, in the long run, it reduces the employability of the...

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