Some businesses choose offshoring to solve the issue of expertise, especially for IT personnel. These companies claim they simply cannot find enough qualified employess in the United States to do certain technology jobs. Do you agree with this assessment? Why or why not? From first glance at this statement, it seems like a line that from businesses to help justify their offshoring practices. This statement is one that seems like it would come out of the PR department when consumers are voicing their displeasure over the company’s choice to offshore their processes.
It is definitely not the truth for a company in today’s economy. I have a number of friends that work for Nationwide Insurance here in Gainesville Fl. It is mostly a call center operation here and they are constantly hearing rumors about the company moving the operations over seas to save money. If Nationwide does end up doing this at some point, it will not be because of a lack of qualified people to do the work. With Gainesville being a college town, there are plenty of available and qualified employees to accomplish the work. Maybe this is one of the mains reasons they have not yet outsourced this call center.
Although I believe what I have previously stated, there are instances in the past 15 years where this comment could have been completely correct and legitimate. In doing my research for this question, I came across an article about the advantages and benefits of offshoring. They surmised that during the “mid 1990’s, U. S. -based businesses have looked overseas to locate their manufacturing, business IT Applications Maintenance and Call Center and other operations in emerging countries with strong labor forces, low wage rates and favorable business climates.
... research propositions. Finally, implications for operations management are discussed. What are business processes? Business processes can be thought of ... and organisational change: lessons from a comparative analysis of company experiences”, European Management Journal, Vol. 13 No. 1 ... the appropriate initial approach: that’s why it works well, because we’re a highly empowered organization, ...
This trend was accelerated by Y2K and the IT industry’s need to rapidly build software maintenance “factories” to research, correct and test the “millennium bug”. With this being said, it is believable that at the rate at which this IT world has grown, the need for more qualified employees could not have been adequately handled with the options in the United States at the time. It would take at least 4-6 years for the future and current students to see the trend of job needs and decide to enter that field.
So, at the time, the companies had to make these decisions for more than cost concerns. In the past few years, this has changed in our country. Students are getting IT jobs and with the amount of people out of work there are more students in our country than ever before. In March 2010 Gartner reported: “India is also starting to face some challenges including wage inflation, local attrition rates, geographical issues and financial irregularities.
Because of this and the ever increasing “hidden costs”, companies are beginning the process of IT Onshoring. In his article, Herge states that the cost savings of offshoring for companies today is somewhere between 0-10%. For most companies this is not worth the negative publicity and the other possible hidden costs to come. They have begun bringing jobs back home and hopefully our students have studied hard to help this country grow!