Student Projects:Outsourcing PPF:Topic Discussion
From CSEP590TU
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Kiran's email
Outsourcing in IT predated by similar movement in manufacturing
# Companies that didn't outsource then no longer exist - Verify with examples. # Study the possible causes that led to this kind of outsourcing and contrast with IT outsourcing.
Causes of IT outsourcing
- Globalisation
- WTO??
- Fast communication
- Fast transport (3 and 4 may be good for other reasons, too)
- Suitable political climate - no major Cold War-like polarisation of world -> free trade (and outsourcing) all over
- Strong dollar leads to a very favourable exchange rate - Eg:$1 = 46 rupees. (So, Oracle can afford to pay midlevel employees with 2 years experience a slary of 600000 rupees ie $12000 approx. without affecting their bottomline even marginally. The salary, on the other hand, is AMAZING by Indian standars and such salaries can facilitate a lavish lifestyle anywhere in India).
- Volume businesses like call centers and manufacturing are better (economically speaking,of course) handled through outsourcing (any historical precedent here, Stuart?)
Case against outsourcing (US viewpoint)
- Moral obligation to citizens and employees who helped build the company
- Outsourcing may lead to loss of jobs, technical anc commercial advantage
- Reverse brain drain in that good jobs may soon move overseas taking talent with them
- Quality and control concerns about the businesses being outsourced
- Language barrier and transitional costs may be too high
Case against outsourcing(Indian/outsourcee's viewpoint)
- High-paying jobs,no doubt, but not really satisfying work
- Odd hours + not much scope for advancement in industry
- No significant improvement in country's skilled manpower and techno. advantage
Some issues to be raised and, if possible, answered
- With the new free market economy and WTO, is outsourcing inevitable?
- If not, will companies that don't outsource remain competitive? (Some historical studies of the manufacturing outsourcing phenom might be useful to draw parallels here)
- The first few cos. that outsourced to India faced a lot of problems - no processes of quality,management,development but once everything was set up, its now not even a question of If they'll outsource, but how much. [ Eg:GE] Examine how policy initiatives might've helped foster this enthusiasm abroad.
- How far will/can IT outsourcing go? Can products for Ameircan markets be designed in India? Or is outsourcing destined to remain within the fields of supoort and peripheral development?
Other issues
- Graphs showing savings with/without outsourcing on companies' bottomlines.
- How much of the advantage of outsourcing is due to policy intiatives rather than real benefits?