Outsourcing: The New Global Trend

The customer is always right. This golden rule of business even resonates with giant corporations—the consumers are the main priority, because without their support, revenue will stop pouring in. For example, if the consumer wants businesses closer to home, that’s what they’re going to get.  The distance problem has initiated a recent trend in outsourcing that can be seen in countries all over the world, most recently India and the United States.

Pressure is building from American clients of Indian companies to move state-side for faster customer support. Indian employees are needed in the United States in many IT fields in order to develop software and aid clients. Yet outsourcing is easier said than done due to President Obama’s implications of higher standards to apply for work visas. When Indian employees simply do not have access to a work visa, it forces Indian companies to hire tech workers who are American citizens or hold green cards, even though the workforce is more expensive. However, Indian companies like the American workers because when they generate employment in the U.S., it makes winning contracts with state and local governments a lot easier. In 2011, India spent $27.7 billion on outsourcing, and it looks as if this number will continue to increase in the coming years as pressure for Indian companies in the United States rises.

Access to faster customer service and rising employment in America may seem like just what this economy needs, yet it is easy to forget that the United States is also outsourcing, thus taking away American jobs. Ford Motor Company is moving more production to South America. Due to Brazilian trade limitations, Ford plans to move existing Mexican plants to Brazil to produce some if its smaller cars. This move will not only increase revenue for the company, making up more than half of all South American auto sales, but it will also increase Ford’s competitiveness. With Ford’s new production products, they will be able to produce 20% more cars, enabling them to slash prices. This will help them compete with the nation’s other top car suppliers like General Motors and Volkswagen.

Tracking outsourcing will surely be interesting as the implications to the global economy become apparent. As for now, what are your opinions on outsourcing? Should the United States continue to implement restrictions on work visas or should the government welcome foreign companies with open arms?