With many international companies offering low wages to employees, U.S. companies are turning to international outsourcing as a way to save revenue and become more competitive in terms of pricing and marketplace position. Before considering an outsourcing venture, it is important to understand the pros and cons of moving your U.S. based business overseas.
First, when outsourcing there is a certain level of risk associated with competition. If your company produces a specific product or service, with tight competition in the United States, outsourcing any part of that product or service may result in an inability to maintain competition or capitalize on new opportunities in the market. Because many clients want to see, feel and touch the service or product provider, retaining services domestically may be crucial in landing new accounts.
In addition to the inability to efficiently compete in the marketplace, many international clients do not provide the necessary check and balances required to comply with regulation and standards within the U.S. marketplace, i.e. Sarbanes-Oxley compliance. While measures can be taken to secure some degree of check and balance, the domestic corporation will never know, with 100 percent certainty, that these standards are adhered to without taking measures to regulate the process internally, thus resulting in additional costs.
To the advantage of mid-size U.S. companies, outsourcing provides, to some extent, a cost savings in the area of technology. Because IT services, in the United States, from equipment to IT personnel and specialists, are expensive, there is a significant degree of financial incentive to a company when outsourcing for this reason alone. Additionally, some U.S. companies, namely larger corporations, have found the outsourcing of day to day operations is quite financially lucrative as it frees time and resources, domestically, to conduct research into new technology, such as in medical fields.
As an alternative to the cost benefits of outsourcing, some U.S. companies have turned to a newer strategy which involves the hiring of college graduates or college students in their final year of academics. While the academics are in place, many of these graduating technology students are on the cutting edge of research but with no professional experience. To the benefit of the U.S. companies, this lack of professional experience affords the employer with an opportunity to hire some of the brightest minds in their field at a much lower salary compensation package than their counterparts who have been in the technology field for many years. While this is not an ideal situation for our domestic workers, it is a viable option to prevent the continued rise in outsourcing to international companies where the United States receives no financial benefit.
As with any corporate financial and employment practice, finding the right balance of employees, coupled with technology products, can be complicated. While outsourcing has long been a viable alternative for many domestic U.S. companies, there is growing trend to reverse this process and find other alternate methods to reduce production costs while providing quality products and services to consumers.
