Offshoring
Brian Siegel
INFO Case
Off shoring at Global Information Systems, Inc.
Cutting cost, but at what expense?
Off shoring: trend, cost saver, … friend or foe
Does off shoring give you a competitive advantage, or a short-term solution to an ever-changing problem? Cutting cost is a key core concept at any business at any time, all without cutting quality. The opportunity to off shore ones operations, IT department, customer service department, etc., to cut overhead on labor or other costs is a huge trend, and also something that is a huge debate. We all hear it, especially being in a graduate business course in relation to India, China, Malaysia, Taiwan, and many other emerging hotbeds for the brewing of cheaper manufacturing, technology, and production. And why not, with all the immediate savings in human labor hours and head count! One can cut the labor rate significantly for the same amount of work, and a different accent on the other end of the phone or email line.
If the remote location that is forming an alliance with your firm can assimilate your goals, capacity, and vision the way you need to, and the way that needs to be done for a successful process to run, then why not outsource? There seems to be a trend towards patriotism, keeping jobs at home, and supporting the members of companies where they are based or where they were started. It “looks” good to stay within your borders, and stick to exporting, which assists employing members of the society at “home”. With the changing of companies and the world getting more flat with technology, wireless, Internet, and many other updated forms of communication, why not update and upgrade your work force? It’s been shown that when a company out sources its’ labor, it actually generates more revenue, cost savings open up funding for more projects closer to home while saving abroad, seems like a win-win situation. As long as the systems are compatible, the workers can interact fluently with the home offices, culture and language barriers aren’t obstacles, and the correct systems of control and measure are in place, it’s worth seeking if outsourcing would align with a companies goals.
David Ricardo, economist mentioned in the case, had some very intriguing things to say about free trade, global interaction of business, and outsourcing type ideas. Political, technology, work force member’s capabilities, changing world, and concept of comparative advantage. The ideas discussed of where displaced workers would go seemed intriguing. One can lead the outsourcing, be a part of it, or a victim. Saving money to make money is not something new. The ever-changing global economy and flatter world is something relatively new. Like an IT program, software, or system, outsourcing is a functionality that people may want to get used to and learn, because it’s not going away! It’s ironic, I suggest using an IT system to diagnose this market and opportunity to analyze this potential shift in resource to overseas. Due diligence is definitely key, like in the case how equipment, buildings, government, contracts, re hiring and finding new labor, when all said and done cuts significantly into the cost savings. You have to look at the robust picture. Sure on one side the labor and contract rate is lower, but you’re not central to the location, quality control is more difficult, systems and IT software/hardware may be shipped there, but what they are accustomed to is different from what you’re providing, and many other factors that may impede the huge cost savings your tunnel vision of labor alone led you towards.
I think it’s an interesting subject, and affecting today’s college graduates, especially on the IT side of things, more and more every year. Companies seek advantage to merge with other businesses, have diversity, and outsource for aesthetics, cost savings, and various other reasons that may be more political than the old-fashioned dollar bottom line. I can’t wait to see how the growth in the outsourcing trend affects us in the future, the different IT and service departments that are re located overseas, how it shapes our world, our business, and selves. It sure allows more access to other opportunities when having any kind of operation in another country. We usually hear the success stories and assume there is this huge wage gap, wish is true, but there are unsuccessful stories that we don’t hear about too often, so one must use IT (for analysis and measure) before outsourcing IT! So, the case ends with a great question, what direction should Jason take? Probably something that focuses on international something or other, then get his MBA at Xavier University, the “Harvard of the Midwest”.
INFO Case
Off shoring at Global Information Systems, Inc.
Cutting cost, but at what expense?
Off shoring: trend, cost saver, … friend or foe
Does off shoring give you a competitive advantage, or a short-term solution to an ever-changing problem? Cutting cost is a key core concept at any business at any time, all without cutting quality. The opportunity to off shore ones operations, IT department, customer service department, etc., to cut overhead on labor or other costs is a huge trend, and also something that is a huge debate. We all hear it, especially being in a graduate business course in relation to India, China, Malaysia, Taiwan, and many other emerging hotbeds for the brewing of cheaper manufacturing, technology, and production. And why not, with all the immediate savings in human labor hours and head count! One can cut the labor rate significantly for the same amount of work, and a different accent on the other end of the phone or email line.
If the remote location that is forming an alliance with your firm can assimilate your goals, capacity, and vision the way you need to, and the way that needs to be done for a successful process to run, then why not outsource? There seems to be a trend towards patriotism, keeping jobs at home, and supporting the members of companies where they are based or where they were started. It “looks” good to stay within your borders, and stick to exporting, which assists employing members of the society at “home”. With the changing of companies and the world getting more flat with technology, wireless, Internet, and many other updated forms of communication, why not update and upgrade your work force? It’s been shown that when a company out sources its’ labor, it actually generates more revenue, cost savings open up funding for more projects closer to home while saving abroad, seems like a win-win situation. As long as the systems are compatible, the workers can interact fluently with the home offices, culture and language barriers aren’t obstacles, and the correct systems of control and measure are in place, it’s worth seeking if outsourcing would align with a companies goals.
David Ricardo, economist mentioned in the case, had some very intriguing things to say about free trade, global interaction of business, and outsourcing type ideas. Political, technology, work force member’s capabilities, changing world, and concept of comparative advantage. The ideas discussed of where displaced workers would go seemed intriguing. One can lead the outsourcing, be a part of it, or a victim. Saving money to make money is not something new. The ever-changing global economy and flatter world is something relatively new. Like an IT program, software, or system, outsourcing is a functionality that people may want to get used to and learn, because it’s not going away! It’s ironic, I suggest using an IT system to diagnose this market and opportunity to analyze this potential shift in resource to overseas. Due diligence is definitely key, like in the case how equipment, buildings, government, contracts, re hiring and finding new labor, when all said and done cuts significantly into the cost savings. You have to look at the robust picture. Sure on one side the labor and contract rate is lower, but you’re not central to the location, quality control is more difficult, systems and IT software/hardware may be shipped there, but what they are accustomed to is different from what you’re providing, and many other factors that may impede the huge cost savings your tunnel vision of labor alone led you towards.
I think it’s an interesting subject, and affecting today’s college graduates, especially on the IT side of things, more and more every year. Companies seek advantage to merge with other businesses, have diversity, and outsource for aesthetics, cost savings, and various other reasons that may be more political than the old-fashioned dollar bottom line. I can’t wait to see how the growth in the outsourcing trend affects us in the future, the different IT and service departments that are re located overseas, how it shapes our world, our business, and selves. It sure allows more access to other opportunities when having any kind of operation in another country. We usually hear the success stories and assume there is this huge wage gap, wish is true, but there are unsuccessful stories that we don’t hear about too often, so one must use IT (for analysis and measure) before outsourcing IT! So, the case ends with a great question, what direction should Jason take? Probably something that focuses on international something or other, then get his MBA at Xavier University, the “Harvard of the Midwest”.
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