What Does Outsourcing Mean to Tech companies?

December 19, 2020

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Introduction:

In the past decade, companies decided to implement outsourcing due to their needs and growth. To be more precise, their needs became so specific that talents for those particular positions were not easy to find in their national market.

It is known that the startup ecosystem has become a big deal and is quite big nowadays. Thanks to outsourcing, not only founders but entrepreneurs as well, employ top tech talents from all over the world.

Indeed, they hire these people for less money than they would usually hire tech talents from their national market. 

Outsourcing and its bad reputation: 

When it comes to the US IT market, the term “outsourcing” does not have a good reputation. It is compared to a “flight of jobs” away from the homeland. In other words, US companies give money to foreign companies and talents.

 

Kimberly Amadeo from the Balance says that the main reason why its reputation is bad is the contribution outsourcing has US unemployment. According to her, there are 14 million outsourced jobs at the moment and each outsourcing affects negatively and increases unemployment in America.

 

Paul Klein from the Guardian disagrees. On the contrary, he says that unemployment happens due to corporate irresponsibility. He adds that outsourcing besides jobs gives community programs as well.

What is outsourcing? 

Before siding with either Paul or Kimberly, people need to understand what outsourcing is. In the simplest way possible, outsourcing allows US companies to employ and receive services or goods from foreign suppliers.

 

Outsourcing happens when there is a shortage of labour or the cost of that labour is extremely high. For instance, US companies usually hire international designers or soft developers. Besides IT services, companies outsource other job sectors like manufacturing, call centres, R&D, and distribution.  

Why do companies outsource? 

Outsourcing means a great deal for companies because it lowers their overhead to produce merchandise, invention, or product. To be more specific, outsourcing is important because it increases their revenue or profit margins.

Brandon Gaille says that approximately 50 per cent of companies stated that the reason why they outsource is the reduction of operating costs. The other reasons include improved business, access to new IT resources, company transformation, and access to management expertise.

    Conclusion

     

    Outsourcing saves a lot of money and time, that is a fact. It also brings a lot more than just low expenses and it supports Paul’s opinion in comparison to Kimberly’s. Businesses grow all the time and outsourcing indeed can promote innovation and access to new customers and skills.

     

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