Outsourcing: Trends and Opportunities

Globalisation is accelerating and its impact on our lives continues to grow. Economic globalisation holds immense potential for helping build a better world for all. Outsourcing expedites the globalisation process. Globalisation in outsourcing is here to stay. However, there are many challenges and barriers to overcome, if the full potential of economic globalisation in benefitting humanity has to be realised. The economies of many Asian Countries such as China, India, and Malaysia, which have been sluggish until one or two decades, have today become classic boom time stories — thanks to opening up of markets and economic globalisation.

Since the beginning of the age of industrialisation, the growth of an enterprise heavily depended on efficient allocation of resources. Economic globalisation makes perfect sense, because ultimately it means nothing more than efficient allocation of resources, with greater choices in means and greater rewards in the outcomes for greater and greater numbers of people (Bourguignon; Venables, 2002) If one has to go by purely utilitarian considerations, i. e. , seeking greater happiness for greater number of people, economic globalisation is the path to pursue.

However, economic globalisation mostly goes hand in hand with cultural globalisation, the advantages of the latter being often debatable, especially in the face of erosion of cultural values and cultural diversity with the concomitant “Americanisation” of the world. Still, economic globalisation, and to an acceptable measure, cultural globalisation can be pursued while still upholding the cultural integrities of various societies and cultures across the world.

Achieving such wholesome balance is one of the challenges that need to be dealt with on the path to attaining greater levels of economic globalisation. Some of the other barriers are reactionary interventionist policies by the governments as well as selfish and exploitative tendencies on the part of some participants. When such challenges are addressed and barriers removed, economic globalisation can pave the path for us to reach a greater heights of affluence. In 2002, India had 90 per cent of U.

S organisations' IT off-shore business. However, many Fortune 500 companies that have outsourced to India are looking to diversify the risks associated with dependence on one country. China looms as India's biggest competitor, although some consider the two as noncomparable at this time. Other countries considered to be attractive as off-shore outsourcing sites include Malaysia, the Czech Republic, Singapore, the Philippines, Brazil, Canada, Chile, Poland, Hungary, Russia, and Vietnam (Sood 2005).

The outsourcing industry is experiencing an industry trend toward integration and consolidation, even as these large outsourcing services companies are coming under pressure from capital markets to grow revenues and generate predictable margins. As the industry consolidates, it moves from a pure competition environment to an oligopolistic environment. It appears to be a differentiated oligopoly with unique feature of ease of entry for smaller firms. The consequences for this type of economic movement in the industry will eventually mean higher fees, and therefore, less expansion than many experts are now forecasting for industry growth.

Indeed the resulting larger firms will attract more and better talent, thus creating barriers of entry for medium-sized outsource provider organisations. For the talented entrepreneur who plans on running a smaller but efficient firm, this barrier will have no impact. Large outsourcing firms like those specialising in research and development, are attracting the very best human resource talent available, worldwide, though smaller niche-sized firms continue to grow in numbers and importance (Bourguignon, Venables 2002).