What is Outsourcing and How Does it Affect a Country?

In the employment world, people talk a lot about outsourcing, but the question is; what is outsourcing? This article will be based on answering this question and trying to make things clear for those who don’t know the exact definition of outsourcing.

In the 90s, the world was swept by a globalization phenomenon with the immediate results being a lot of economies allowed foreign investments. This was the case in many countries and it resulted in the economies being dependent on each other. With the communication revolution also came globalization and this made the world a global village with continents only a few seconds away from each other as far as communication was concerned. So, the popular world of outsourcing is a child born as a result of the combination of the communication revolution and globalization. Still, what is outsourcing exactly?

In the simplest of terms, outsourcing is the process of obtaining required services from a supplier outside an organization or a country usually at a lower rate than is possible inside the organization or country.

Looking back to initial days of outsourcing, the process started off by outsourcing office works to English speaking developing countries. But, the world embraced digitalization and Information Technology and there was a need for multinational companies to have technological savvy brains providing services outside the companies. Since they felt the area of their expertise could not provide the knowledge needed at their inhouse location, they turned to developing countries. This weighed heavily on economic equations that existed in corporate majors.

The process of outsourcing to developing countries was amazingly cheaper and the work output was satisfactory. The companies viewed this as a great breakthrough because they could get better work than what was offered at home and for a much lower price. This was of course the main reason they took full advantage of outsourcing.

Now that we know the answer to - what is outsourcing, the other question we need to ask ourselves is if it will survive or grow stronger in the coming years. The biggest threat is that it might be banned by laws of developed countries due to the fact that their citizens lose jobs while companies and employees in the outsourcing countries are doing well. This of course can cause political problems in the country using the outsourcing

As of now drawing any conclusion about outsourcing can only be termed as immature. What you should know is that an issue that affects a country’s people and its economy is a sticky one in many different dimensions.

Hopefully you can now explain to anyone who asks - what is outsourcing? - exactly what it is. We can only hope this saga will have a happy ending without much damage to the economy and the people of the developing or the developed world.