Types and functions of global outsourcing

Essay 2012 10 Pages

Business economics - Business Management, Corporate Governance


1. Introduction

This report is on the major topic of course named The Competitive Global Context on the Global Outsourcing. The scope of this report is very broad as it is supposed to answer the question on the on-going issue that whether The Ministry of Trade and Industry of developed countries should impose restriction on Outsourcing exporting countries, which pays lower pay to their employees for the purpose of accomplishing the objectives of specified global outsourcing. This report consists of 5 sections where the Literature Review and the Recommendations sections are the sections of special focus.

2. Background Context

Global Outsourcing has had a huge impact on world’s economical and political environment. This dramatic change also resulted in being the controversial influence in the world’s economies. All this is possible through the development and advancement in the field of Technology, which is not only eliminating the borders but also bringing the closer to each other. Through the global outsourcing the companies are moving more jobs in overseas in order to be proved as the cost-saving factor for the companies. So it means that the outsourcing has positive effect on both sides, providing income to the developing countries and also to reduce the costs of the companies which make them able to earn handsome profit and also to increase their share-holder’s wealth on continuous basis (Gene & Helpman, 2002).

Global outsourcing has provided a new revenue generating platform to the developing countries and Off-shore outsourcing is one of the big contributing factor in the given scenario. It is considered as the legitimate way towards the liberation of global trade and also allows the developing countries in leveraging their comparative advantage of utilising abundant labour and also of taking advantage of low cost environment (Mann & Kirkegaard, 2003).

3. Research Question

This report is written in an effort to answer the question that whether the Trade Ministries of developed countries to pass the law which would imposes restrictions on Big companies residing in developed countries (USA, UK, France & Japan) to outsource its business processes to the countries (India, China, Russia & Philippine) where the labour wage level is much lower than the companies’ native countries.

4. Literature Review

4.1. Definition of Global Outsourcing

In practice, with an intention to be competitive in the given industry, the company should have to perform its best to obtain different sources from different means to generate the sustainable comparative advantage by utilising different approaches (Morgan, 2005). And such comparative advantages enable companies in maintaining and increasing their market shares and profits on continuous basis. Global Outsourcing is the biggest source in this manner which allows the firms in finding sources which have lower labour cost, new market opportunities, unique material and also making the companies’ overall operation flexible (Bernard, et al., 2004).

The companies who would lure towards low cost, unique materials and flexibility through global outsourcing must have to keep control of some problems like the loss of three things (talent, Intellectual Assets Property & Organisational performance. While these sources enable organisations to low for new ways in order to maintain and sustain its competitive advantage and also to enhance the overall companies’ performance. The description of all these challenges and opportunities along with the reasons of Global Outsourcing is illustrated in the figure below:



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Institution / College
University of Bedfordshire – MBA



Title: Types and functions of global outsourcing