Outsourcing to Foreign Countries - Essay Example

Outsourcing to Foreign Countries With the advent of the internet and massive computing systems that are nevertheless small in physical scale, the world is becoming an ever-shrinking globe. National boundaries are becoming blurred as people in other countries, notably Mexico and India, begin working for companies in the United States. Globalization and the resulting process of outsourcing has been a hotly debated topic in the media, political and social circles for the past several years. It is typically viewed as a necessary and unavoidable key to future world economic development. Others have denounced the process as it seems to increase the current inequalities that exist within and between nations, threatens the employment and living standards of individuals in all countries as talent is pulled from each and low-paying jobs are farmed out to others and prevents the natural social progress with which each of these countries have been involved. Although this process is unlikely to change and reversal seems impossible, considering the effects this process has on the individual as well as the nations and organizations involved, very few people, organizations or states stand to benefit as a result. Changes in the way in which organizations conduct business have been rapid and wide-spread as the concept of outsourcing has been introduced. It is the inherent nature of the marketplace to increase efficiency within the workplace by constantly striving to produce the most products with the least expenditure of resources. It is this concept that has driven many corporations to join in the globalization process, frequently outsourcing many of their activities and production processes to less developed countries in which this process is less expensive and requires fewer restrictions, licensing, and/or controls. “Global markets offer greater opportunity for people to tap into more and larger markets around the world. It means that they can have access to more capital flows, technology, cheaper imports and larger export markets” (International Monetary Fund Staff 2002). Although the idea of a global market and outsourcing sounds like an ideal situation for the increased flow of goods and currencies throughout the world, as well as a possible solution for the redistribution of wealth into some of the world’s most destitute countries, “in practice, this has meant that the governments of the advanced capitalist countries, along with the I.M.F., the World Bank, and the W.T.O., have increasingly sought to force other nations to adopt market economies, privatize public companies and resources, abandon labor and environmental regulations, reduce social services, and embrace ‘free trade’ and the free movement of transnational capital” (Smith 2002). It is noted that much of the outsourcing effort is being organized and encouraged by the Western capitalist countries and the big businesses that have ever-increasing power in the political circles, forcing their own ideals, agendas and policies upon developing nations desperate for some help. Outsourcing increases the ability to amass greater amounts of capital thus a greater ability to undercut competitors. Larger corporations move into smaller markets, bringing in their greater resources. Smaller businesses are finding it more and more difficult to survive the globalized marketplace. Rather than leading to an increased diversification in the market, as well as the associated opportunities for employment and competitive salaries, outsourcing is beginning to decrease the ability of local citizenry to find adequate support outside of the multi-national corporation and opportunities for entrepreneurship dwindle. “As we all search for the best deal for our consumer dollars, regional superstores and on-line shopping drives our Mom and Pop shops, local manufacturing and local service companies out of business.” (Salmons & Babitsky 2002 p. 4). Globalization has caused the outsourcing of many thousands of American jobs overseas. The phenomenon of globalization was facilitated by and has been enhanced by the internet which has produced new types of crime such as identity fraud. U.S. consumers can be scammed by people in other countries who are beyond the reach of the American legal system. Online fraud continues to be a problem that places consumers’ money and investments at significant risk. “In September 2003, the Federal Trade Commission reported that 9.9 million U.S. residents have been victims of identify theft during the past year, costing businesses and financial institutions $48 billion and consumers $5 billion in out-of-pocket expenses” (Kay, 2004). These figures are equally disastrous for consumers on the other side of the Atlantic in Britain. “Online banking customers lost £22.5 million in online banking scams in the first half of this year, up 55 per cent from the same period of 2005” (Francis & Gilmore, 2006). A great deal of these scams are perpetrated through what is commonly labeled ‘phishing’ rather than technical glitches in the banking security systems, highlighting the need for online consumers to educate themselves in how best to protect their finances when conducting business online. ‘Phishing’ is not necessarily a new approach to fraud, but it has a new method of delivery, particularly in an online user’s email inbox. These messages usually emanate from foreign countries, especially African countries, and are designed to give the impression that they come from legitimate businesses that the user is likely to have official business with. These businesses could be banks, such as Citibank, online organizations, such as eBay or PayPal, internet service providers or any number of online retailers. To complete this impression, the messages typically incorporate corporate logos and business-type formats that lend an extra measure of authenticity to the message. To gain the information criminals need to steal an identity or to gain access to online accounts, these letters usually indicate that the company featured is doing some sort of auditing or account checking procedure and requests the recipient of the letter to verify certain facts about their accounts, including account numbers, passwords, credit card numbers, social security numbers, date of birth or mother’s maiden names – in short, all of the information one would need to make a purchase without actually having a credit card in hand (Kay, 2004). Despite the apparent threat to local businesses caused by outsourcing, developing nations are eager to accept the influx of big business as the international corporation operating in the right third world country can substantially increase the GNP. Outsourcing offers extensive opportunities for truly worldwide development but it is not progressing evenly. Because companies expand into new markets based on how well that market can meet their own needs, this process sees some countries becoming integrated into the worldwide economy much faster than others. As would be expected, those countries that have been able to integrate are seeing faster growth and reduced poverty. “A larger number of developing countries have made only slow progress or have lost ground. In particular, per capita incomes in Africa have declined relative to the industrial countries and in some countries have declined in absolute terms” (International Monetary Fund Staff 2002). In addition, the growing power of these corporations as they come into developing nations has had a wide impact on the policies and restrictions that are created. The effect of having less restrictions in terms of humanitarian, environmental and operational procedures has led to an economy that rewards cutthroat business practices at the cost of a great deal of progress in these areas made in more advanced countries. Of course, all this change filters down to ultimately affect the individual citizens in a very real way. No longer sure of their livelihood thanks to increased competition for less jobs available, the globalized economy has made it difficult, if not impossible, for the poor to dig their way out of their poverty while increasingly helping the wealthy add to their fortunes. In addition, the jobs that do become available are not always jobs that would be open to local residents as they might require skills or knowledge that were not previously necessary. “Those with jobs know that they could lose them at any time. Downsizing by companies moves the bulk of workers into contract and temporary employment” (Salmons & Babitsky 2002). This increased competition for jobs has led to a Westernized way of living that places emphasis on fast lifestyles and a constant pressure to keep up with the latest advancements and social opportunities in order to have a chance at the best jobs. “In this world of intense competition, social networking is everything. Who you know and how they can help you is the coin of the realm. The result is that we increasingly isolate ourselves into gated communities and exclusive membership organizations” (Salmons & Babitsky 2002). Those who wish to advance in life know they must do so by sacrificing family values and traditional belief systems in order to fit in with the correct social crowd to obtain the types of employment that will provide them with the lifestyle they have been told is best. Increasingly, the world is operating upon a Western definition of the ideal life, neutralizing cultural differences in an effort to be politically correct and to avoid cultural clashes and changing the roles of family members to bring them into the capitalist ideology. The pressure to become a part of this infamous ‘rat race’ filters quickly into the society, realized by adults and then distributed down to the children. “Parents increasingly feel that they must help their kids learn how to get in the race as early as possible to increase their chances for the best jobs and a good life in the future” (Salmons & Babitsky 2002). Those who don’t fit into the model, who don’t buy into the set standard ideals or who refuse to relinquish their cultural heritage for the benefits associated with blending in are quickly lost to the bottom of the income stack. “The gap between social classes widens as a result of this voluntary sorting” (Salmons & Babitsky 2002). With the ill effects of outsourcing acutely felt in some areas of the world, it might be questioned as to why any organization, nation or individual would consider encouraging its spread. However, it could be argued that outsourcing has been in existence ever since the first two countries established communication with each other. The only difference now is that the advances in technology and communication have enabled business to be conducted over longer distances in less time, enabling this kind of interaction to occur regardless of geographic location. In addition, there are benefits to be gained through globalization as countries such as Asia see dramatic improvement in their GNP, which is further transferred down into the general populace. Although there is still poverty in these nations, it can be argued that the poor are living better quality lives as a result of the influx of capital and resources. The question, then, is not how to stop outsourcing, but rather how to make outsourcing work in such a way that it does not break down the cultural ideals, family structures or provide corporations with unchecked controls over developing nations even while it works to benefit the world economy. References Francis, Clare & Gilmore, Grainne. (6 November 2006). “Online Banking Fraud on the Rise.” Times Online. Accessed June 15, 2007 from International Monetary Fund Staff. (January 2002). “Globalization: Threat or Opportunity.” International Monetary Fund. Retrieved June 14, 2007 from Kay, Russell. (2004) “QuickStudy: Phishing” Computer World. January 19, 2004 Retrieved June 14, 2007 from http://www.computerworld.com/printthis/2004/0,4814,89096,00.html Salmons, Jim & Babitsky, Timlynn. (23 March 2003). “Shamrocks and Nanocorps: Business Model and Technology Innovation to Bridge the Digital Divide.” 2002 Northern Montana Technology Exposition [keynote presentation]. Retrieved June 15, 2007 from < http://sohodojo.com/mt-tech-expo-scripted.pdf> Smith, David Michael. (August / September 2002). “The Growing Revolt Against Globalization.” Impact Press. Retrieved June 15, 2007 from Read More