The likes of service oriented companies like America Online (AOL) is a prime example of how relocation and outsourcing has changed the way service oriented businesses function in this global economy. AOL continues to be one of our nation's most intelligent economic organizations as they take advantage of the outsourcing for the majority of their customer oriented operations. When an AOL customer calls in to have his password reset he may be talking to someone in India, South America or even the Middle East. Although the customer may not know where his call for help has been routed to, the end result of the call is that the problem is usually solved but at a greatly reduced cost to AOL compared to if that same call was routed to a call center within the United States boarders.
AOL's competition is just now beginning to understand the importance of outsourcing the various customer related functions of the business abroad. Like AOL and the Microsoft Network (MSN) before them, EarthLink has been forced by economic profit concerns to relocate all billing, sales, and tech-support call resources abroad. "EarthLink Inc. has announced plans to cut 1,300 jobs, 40% of its workforce, as the company consolidates and outsources its contact centers." (InformationWeek, 2004) This announcement will relocate the third largest internet ISP provider's customer related job functions from cities in Pennsylvania and California and all call-center jobs from Atlanta, Georgia to various foreign-based call centers.
Companies like Microsoft, International Business Machines (IBM), Dell and Hewlett Packard (HP) of the computer software and manufacturing industries were forerunners in the relocation and outsourcing game. "Hewlett-Packard Co. is another of the many corporations to outsource their customer services call center, by setting up a contact center in Bangalore, India earlier in the year." (Binghame, 2004) Although these large computer industry organizations outsource only parts of their operations, many smaller computer companies throughout the industry have chosen to outsource their entire operations abroad with the majority turning to India's many outsourcing and communications companies.
Customer call centers located in the United States no longer make economic sense when compared to the labor cost advantages attained abroad. Foreign call centers offer the same quality pre and post sale...
Ltd., 2007). Furthermore, by 2008, real GDP is expected to be $124.2 billion higher than it would be in an environment without it software and services offshore outsourcing (Flatworld Solutions Pvt. Ltd., 2007). Finally, over the last 10 years, the economy has created an average of 3.5 million new jobs a year, and the vast majority of displaced workers are re-employed within six months. According to Flatworld Solutions Pvt. Ltd.
Outsourcing Corporate Outsourcing: Initially an output of the 1990's outsourcing has now become a significant part of doing business by corporate America. With businesses throughout the country looking for augmenting their competitive rank in an more and more worldwide marketplace, they are observing that they have the potential to reduce costs and keep up the quality through the greater dependence on foreign service contributor seen as subsidiary to their mainline functioning. Currently,
Outsourcing is an inevitable market reality, however, adequate measures must be taken to support the displaced employees, and to retrain them for better employment prospects. Outsourcing has become a highly controversial and much debated issue over the last few years. The economic dynamics of the 21st century have vastly altered the mode of business. While globalization has opened new markets for companies, at the same time, it has forced them to
The U.S. Department of Commerce reports that services to foreign clients brought Americans $131 billion in 2003. This was in addition to offshore services for U.S. customers, which grew by $7 billion. The report shows that labor-intensive production and administrative work has grown in low-cost places, while talent sensitive activities have grown in the United States (Malachuk, 2004). This is a major benefit of outsourcing. Weidenbaum (2005) argues that many American employees
By relocating their businesses, companies save significant amounts of money, time, and other resources that can be better used for other purposes, therefore increasing the company's productivity and general efficiency. Also, "this positive effect of offshoring is considered the primary reason why companies prefer to outsource their jobs to other countries, especially those in the South East Asia since wages are undeniably cheaper" (ePacific, 2007). In addition to this, it
While all the above three solutions are easily applicable, Leethal Fashion Accessories would find it the most challenging to take action, even more so as this is impeded by geographic restrictions. 5. Control Strategies Like any other economist will tell you, implementing a text book solution does not guarantee 100% success rates. It as such necessary to base your strategy on the years of academic expertise; but adjust the findings to
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