Bloomberg Business Week article -Outsourcing

Outsourcing Many companies outsource to different countries to pay lower labor costs, avoid paying benefits, and avoid bureaucratic policies in United States. In a Bloomberg Business Week article entitled “Outsourcing: A Passage out of India”, in this article John Helyar describes the increase of outsourcing facilities in Latin America and Europe. Companies are now offshoring a wide range of white collar services, including IT, payroll, finance, and accounting. One of the advantages is keeping the labor cost low at $3,500 a year, one of the main objectives in outsourcing is to keep the cost of labor as low as possible while meeting (or exceeding) customer demand. One of the disadvantages is the language barrier, regardless of the dialect training; it’s very hard for the employees in the call center to relate in India due to only 10% of the employees having a college degree. Many times when calling an offshore call center, the employees try very hard to relate to the customers to seem empathetic to their needs and complains; but the caller seems to get frustrated due to this language barrier. Due to these jobs not being mass-processing functions, which are India’s strong hold, there are greater opportunities for Latin American and European countries, such as Argentina and Poland; to gain these jobs because they have a higher labor costs than India. Using an outsourcing firm to hire an entry-level accountant in Argentina, for example, costs 13 percent less than a similar U.S. worker, while an Indian worker would cost 51 percent less, but many employers moving higher-end jobs offshore care about more than just getting the lowest wage. “The higher-value outsourcing jobs require a greater understanding of business context and a higher amount of interaction with clients,” says Phil Fersht, chief executive officer of HfS Research, a Boston outsourcing research firm. In the article it states that employers prefer that outsourcing centers be able to

Cited: www.businessweek.com/articles/2012-03-15/outsourcing-a-passage-out-of-india