The term "outsourcing" evokes contrasting and contradicting emotions among people of the developed nations. While the victims swear against this concept, the scholars proclaim that this concept is the growth engine for the future!
No wonder! But whose side should we take? Sometime back, I heard a story of an employee working in MNC committing suicide because his job was outsourced to another company. This evoked a series of protests and failed legislations. But what could be the macro economic perspective of this phenomenon of OUTSOURCING?
Ponder over this fact. Off late, there has been a very popular Internet site that sells the best products at unimaginable discounts. And the discounts are at least 30%. This is something really cool because one gets the best product of superior quality at a very reduced price. It is of course known that the concepts of huge discounts are more an issue of reduced profit margin. But in spite of this, companies are prepared to sell at take away prices. This is primarily because the MNCs are able to globally source in their products. For example, a laptop manufacturer could drive the R & D work in USA, give the manufacturing contracts to a South East Asian country, develop the related software components in a development centre located in India and finally deliver the product in California. The cost advantage incurred is really significant to be ignored by the uproars of anti-outsourcing campaigns.
Also, the laptop that usually sells for 2000 USDs is now available for 1100 USDs. Essentially, the manufacturer transfers a part of his margin to the end user. This results in a volume business, which in turn runs the macro economic engine of the country.
This simple logic proves that outsourcing is a win-win situation for all the stakeholders!
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