Virtuous Cycle: Outsourcing In Canada
DISCUSSION POST:
Virtuous Cycle
Outsourcing is a technique that developed by the business tycoons during the emergence of globalization, it is a debatable subject in the management field as well as in the political views. Outsourcing is nothing but giving subcontracts to an external agency from the parent company to do a particular work. Now a day, multinational companies are very much interested to outsource their jobs to some developing countries to make more profit by introducing this cost cutting strategy. The outsourcing of jobs affects the economic growth of a country both positively and negatively, for capitalists it is a welcoming deed but for a common citizen, still it is a nightmare.
Outsourcing in Canada creates many controversies …show more content…
about Canadian economic growth. Mainly IT companies and auto mobile companies are outsourcing their jobs in Canada, banking sectors are also doing the same. When it comes to economy of the country, these business organizations which are doing outsourcing can contribute more revenue to the government. But, always a good economic stability can be achieved by ensuring the economic status of a common citizen. In those terms, we can’t say that outsourcing always shows a positive sign to the economic development of a country.
According to the Dun & Bradstreet barometer of global outsourcing, more than 30 cents of every outsourcing dollar is related with information technology expenses. Based on their survey, in 1999 IT field spent more than $7 billion for its own outsourcing only. This shows an increment of 10 % or $700 million than the year 1998 (Ozanne, Marq R, 1998). This sort of increments in spending on outsourcing shows that, companies are interested to subcontracting their jobs, which means they are profitable by this deed. It improves the revenue of the company in low investments, this revenue hike may result in the Canadian economic growth and in a long run government of Canada also become the beneficiaries of this income in terms of taxes and insurance (Unknown, 2014). But the remarkable thing is that, this income may not be able to maintain the Gross National Product of the country. If we apply the principle of virtuous cycle in this case, we can identify that the companies which are outsourcing their jobs are working on the basis of virtuous cycle. In less payment they are making more money and automatically the government also become a part of this virtuous cycle.
For example, Sears Canada Ltd. Outsource their telemarketing and call centre services to an American company called Dial America Inc. since 1995 and they also give the same jobs to Philippines, according to the company’s vision, they improved their customer services and telemarketing functions in a cost effective manner. This process improved the financial status and customer satisfaction of the company, eventually it reflects in the economic growth of Canada (Dotson, Sandy, 1997).
On the other hands, outsourcing is a threat to the economic growth of the country, mainly in the case of unemployment.
The recent surveys show that the rate unemployment has been increased than the rate in 2009 recession. One of the major reasons for this joblessness is outsourcing. A lion share of the works of Canadian banks and Canadian financial services were done by Indian information technologists, Bank of Nova Scotia, Royal Bank of Canada and TD Canada trust are the major clients of Indian IT tycoons such as iGate and TATA consultancy services (Unknown, 2014) (Jennifer Kwan, 2013). This kind of over outsourcing results in unemployment and naturally it affects the standard of living of the common people in the country. According to the words of Armine Yalnizyan, a senior economist, found that, a number of people were earn an average annual income of $30000 to $60000, but due to the outsourcing they lose their income quickly and all those people fell in a jeopardy. Those people may suffer homelessness and bankruptcy; it will put a citizen into trouble, and the economic status of this kind of people may affect the total economy of the country (Jennifer Kwan, …show more content…
2013).
For example, last year 41 employees in Canadian imperial bank of commerce (CIBC) lost their job due to IT outsourcing. In the same way TD bank also announces the replacement of its 100 employees and RBC also were in the same risk in the case of 45 employees (CBC News, 2013).
Along with that, several problems such as slackening of managerial control, hidden cost in production or services and the quality problems are the another demerits of job outsourcing. Security and confidentiality threat is the another major disadvantages of job outsourcing, for example, a new concept, design of a products, documents of employees etc. (Bucki, 2014). These all disadvantages may affect a country’s economic stability directly or indirectly.
When it comes to the application of virtuous cycle in this case, it will not work well with the unemployed community in the country. Because, here in this case, people lost their jobs and they don’t have the capacity to enjoy the facilities or customer services that provided by the multinational firms. This means, most of the Canadian companies are accepting subcontracts to increase their productivity by cost cutting, and they are trying to reach their product to common people, but most of this citizens are the persons who were thrown out from these companies. In that manner they don’t have the capacity to avail the services provided by these companies. So, still the principle of virtuous cycle is works with the firms and it works opposite to the Canadian community.
To put it in a nut shell, outsourcing can make both the positive and negative effects in the economic development of a country. But the thing is that, it should rely upon the necessity of particular work. Before starting a work, a company should aware about the capacity of their workers and economic condition of their country. Because, a capitalist country may not be able to come up with standard of mixed economic country.
Works Cited
Andrew, H. (2012, October). A Virtuous Cycle. Retrieved February 07, 2014, from http://search.proquest.com.ezpxy.fanshawec.ca/: http://search.proquest.com.ezpxy.fanshawec.ca/docview/1114310247/F5CC019F0B8C4DC3PQ/2?accountid=39340
Bucki, J. (2014). Top 6 Outsourcing Disadvantages. Retrieved February 07, 2014, from http://operationstech.about.com/: http://operationstech.about.com/od/outsourcing/tp/OutSrcDisadv.htm
Kwan, J. (2013, April 09). Why RBC’s outsourcing fiasco matters to Canadians. Retrieved February 07, 2014, from http://ca.finance.yahoo.com/: http://ca.finance.yahoo.com/blogs/insight/why-rbc-outsourcing-fiasco-matters-canadians-180542150.html
Muhammad, M.
(2010, March). Towards Sustainable Offshore Outsourcing: A Case Study of Quebec Manufacturing Firms Outsourcing to China. Retrieved February 7, 2014, from http://search.proquest.com.ezpxy.fanshawec.ca/: http://search.proquest.com.ezpxy.fanshawec.ca/docview/521931962/E363F6F702684E11PQ/1?accountid=39340
News, C. (2013, April 09). Outsourcing bank jobs is common practice, say employees. Retrieved February 07, 2014, from http://www.cbc.ca/: http://www.cbc.ca/news/canada/outsourcing-bank-jobs-is-common-practice-say-employees-1.1333814
Ozanne, M. R. (1998, September 25). canada outsourcing 1998: going mainstream. Retrieved February 7, 2014, from http://search.proquest.com.ezpxy.fanshawec.ca/: http://search.proquest.com.ezpxy.fanshawec.ca/docview/221366286/B9D3EF7904544B5EPQ/1?accountid=39340
Sandy, D. (1997, September). Sears builds "brand central" through outsourcing. Retrieved February 07, 2014, from http://search.proquest.com.ezpxy.fanshawec.ca/: http://search.proquest.com.ezpxy.fanshawec.ca/docview/208159080/3ED1C318A4B8464BPQ/1?accountid=39340
Unknown. (2014). Canadian banks stop IT outsourcing to India as unemployment grows. Retrieved February 07, 2014, from http://south-asian-news.sandhira.com/:
http://south-asian-news.sandhira.com/canadian-banks-stop-it-outsourcing-to-india-as-unemployment-grow.html
Unknown. (2014). The Pros and Cons of Outsourcing. Retrieved February 07, 2014, from http://www.flatworldsolutions.com/: http://www.flatworldsolutions.com/articles/pros-cons-outsourcing.php
Virtuous Cycle
Outsourcing is a technique that developed by the business tycoons during the emergence of globalization, it is a debatable subject in the management field as well as in the political views. Outsourcing is nothing but giving subcontracts to an external agency from the parent company to do a particular work. Now a day, multinational companies are very much interested to outsource their jobs to some developing countries to make more profit by introducing this cost cutting strategy. The outsourcing of jobs affects the economic growth of a country both positively and negatively, for capitalists it is a welcoming deed but for a common citizen, still it is a nightmare.
Outsourcing in Canada creates many controversies …show more content…
about Canadian economic growth. Mainly IT companies and auto mobile companies are outsourcing their jobs in Canada, banking sectors are also doing the same. When it comes to economy of the country, these business organizations which are doing outsourcing can contribute more revenue to the government. But, always a good economic stability can be achieved by ensuring the economic status of a common citizen. In those terms, we can’t say that outsourcing always shows a positive sign to the economic development of a country.
According to the Dun & Bradstreet barometer of global outsourcing, more than 30 cents of every outsourcing dollar is related with information technology expenses. Based on their survey, in 1999 IT field spent more than $7 billion for its own outsourcing only. This shows an increment of 10 % or $700 million than the year 1998 (Ozanne, Marq R, 1998). This sort of increments in spending on outsourcing shows that, companies are interested to subcontracting their jobs, which means they are profitable by this deed. It improves the revenue of the company in low investments, this revenue hike may result in the Canadian economic growth and in a long run government of Canada also become the beneficiaries of this income in terms of taxes and insurance (Unknown, 2014). But the remarkable thing is that, this income may not be able to maintain the Gross National Product of the country. If we apply the principle of virtuous cycle in this case, we can identify that the companies which are outsourcing their jobs are working on the basis of virtuous cycle. In less payment they are making more money and automatically the government also become a part of this virtuous cycle.
For example, Sears Canada Ltd. Outsource their telemarketing and call centre services to an American company called Dial America Inc. since 1995 and they also give the same jobs to Philippines, according to the company’s vision, they improved their customer services and telemarketing functions in a cost effective manner. This process improved the financial status and customer satisfaction of the company, eventually it reflects in the economic growth of Canada (Dotson, Sandy, 1997).
On the other hands, outsourcing is a threat to the economic growth of the country, mainly in the case of unemployment.
The recent surveys show that the rate unemployment has been increased than the rate in 2009 recession. One of the major reasons for this joblessness is outsourcing. A lion share of the works of Canadian banks and Canadian financial services were done by Indian information technologists, Bank of Nova Scotia, Royal Bank of Canada and TD Canada trust are the major clients of Indian IT tycoons such as iGate and TATA consultancy services (Unknown, 2014) (Jennifer Kwan, 2013). This kind of over outsourcing results in unemployment and naturally it affects the standard of living of the common people in the country. According to the words of Armine Yalnizyan, a senior economist, found that, a number of people were earn an average annual income of $30000 to $60000, but due to the outsourcing they lose their income quickly and all those people fell in a jeopardy. Those people may suffer homelessness and bankruptcy; it will put a citizen into trouble, and the economic status of this kind of people may affect the total economy of the country (Jennifer Kwan, …show more content…
2013).
For example, last year 41 employees in Canadian imperial bank of commerce (CIBC) lost their job due to IT outsourcing. In the same way TD bank also announces the replacement of its 100 employees and RBC also were in the same risk in the case of 45 employees (CBC News, 2013).
Along with that, several problems such as slackening of managerial control, hidden cost in production or services and the quality problems are the another demerits of job outsourcing. Security and confidentiality threat is the another major disadvantages of job outsourcing, for example, a new concept, design of a products, documents of employees etc. (Bucki, 2014). These all disadvantages may affect a country’s economic stability directly or indirectly.
When it comes to the application of virtuous cycle in this case, it will not work well with the unemployed community in the country. Because, here in this case, people lost their jobs and they don’t have the capacity to enjoy the facilities or customer services that provided by the multinational firms. This means, most of the Canadian companies are accepting subcontracts to increase their productivity by cost cutting, and they are trying to reach their product to common people, but most of this citizens are the persons who were thrown out from these companies. In that manner they don’t have the capacity to avail the services provided by these companies. So, still the principle of virtuous cycle is works with the firms and it works opposite to the Canadian community.
To put it in a nut shell, outsourcing can make both the positive and negative effects in the economic development of a country. But the thing is that, it should rely upon the necessity of particular work. Before starting a work, a company should aware about the capacity of their workers and economic condition of their country. Because, a capitalist country may not be able to come up with standard of mixed economic country.
Works Cited
Andrew, H. (2012, October). A Virtuous Cycle. Retrieved February 07, 2014, from http://search.proquest.com.ezpxy.fanshawec.ca/: http://search.proquest.com.ezpxy.fanshawec.ca/docview/1114310247/F5CC019F0B8C4DC3PQ/2?accountid=39340
Bucki, J. (2014). Top 6 Outsourcing Disadvantages. Retrieved February 07, 2014, from http://operationstech.about.com/: http://operationstech.about.com/od/outsourcing/tp/OutSrcDisadv.htm
Kwan, J. (2013, April 09). Why RBC’s outsourcing fiasco matters to Canadians. Retrieved February 07, 2014, from http://ca.finance.yahoo.com/: http://ca.finance.yahoo.com/blogs/insight/why-rbc-outsourcing-fiasco-matters-canadians-180542150.html
Muhammad, M.
(2010, March). Towards Sustainable Offshore Outsourcing: A Case Study of Quebec Manufacturing Firms Outsourcing to China. Retrieved February 7, 2014, from http://search.proquest.com.ezpxy.fanshawec.ca/: http://search.proquest.com.ezpxy.fanshawec.ca/docview/521931962/E363F6F702684E11PQ/1?accountid=39340
News, C. (2013, April 09). Outsourcing bank jobs is common practice, say employees. Retrieved February 07, 2014, from http://www.cbc.ca/: http://www.cbc.ca/news/canada/outsourcing-bank-jobs-is-common-practice-say-employees-1.1333814
Ozanne, M. R. (1998, September 25). canada outsourcing 1998: going mainstream. Retrieved February 7, 2014, from http://search.proquest.com.ezpxy.fanshawec.ca/: http://search.proquest.com.ezpxy.fanshawec.ca/docview/221366286/B9D3EF7904544B5EPQ/1?accountid=39340
Sandy, D. (1997, September). Sears builds "brand central" through outsourcing. Retrieved February 07, 2014, from http://search.proquest.com.ezpxy.fanshawec.ca/: http://search.proquest.com.ezpxy.fanshawec.ca/docview/208159080/3ED1C318A4B8464BPQ/1?accountid=39340
Unknown. (2014). Canadian banks stop IT outsourcing to India as unemployment grows. Retrieved February 07, 2014, from http://south-asian-news.sandhira.com/:
http://south-asian-news.sandhira.com/canadian-banks-stop-it-outsourcing-to-india-as-unemployment-grow.html
Unknown. (2014). The Pros and Cons of Outsourcing. Retrieved February 07, 2014, from http://www.flatworldsolutions.com/: http://www.flatworldsolutions.com/articles/pros-cons-outsourcing.php