Outsourcing has had a firm footing in the American economy for decades. In the 1970s, when the term “outsourcing” was first mentioned, this process was initially geared toward less critical tasks assigned to outside partners.
In a way, the outsourcing industry might have been seen as simply low cost labor to finish up the least important tasks for a business.
However, outsourcing has since evolved, expanding prospects for businesses across the globe. Outsourcing and globalization are also not just a means to an end to simply cut costs: They have become significant tools for companies that are serious about establishing authority in the minds of customers and fine-tuning their operations.
In this article, we take a closer look at the rise of offshore outsourcing, the globalization of US services, and the impact of outsourcing globalization on the world.
A focus on partnerships aimed at the bigger picture of the outsourcing industry
Collaborating with third-party suppliers from other countries has become part of a more extensive strategy to streamline business processes, reduce costs, improve productivity and customer experiences, and potentially enhance revenue.
Several US services, from accounting and software development to call centers, customer support and data entry, can now be managed externally – often at a favorable lowest cost. This allows businesses to tap into the expertise of external providers without needing to hire and train additional staff, which could lead to additional business costs.
Thanks to technology, globalization and outsourcing have become even better interlinked. Globalization has been clearly defined by the exchange of resources, while outsourcing taps into working with specialized foreign talent, often across borders.
Companies can easily communicate with outsourced partners using the preferred digital tools, making it easy to get the services or products they need for their clients at a favorable cost.
Therefore, outsourcing globalization has brought about economies and cultures coming together to work together toward achieving shared operational goals.
What is the link between globalization and outsourcing?
Offshore outsourcing has become a crucial part of growth strategies for US businesses – in many cases for big-name brands such as General Electric and IBM.
Business Process Outsourcing (BPO) has put employers in the favorable position of using third-party vendors that significantly benefit productivity and lower costs. They can focus on their core business functions and bulk up the efficiency of their operations to enhance the customer experience when they outsource specific projects or tasks.
On the other hand, many businesses are outsourcing their services to external companies. They use these opportunities to add income generation to their business models, with the potential opportunity to grow their customer bases.
From this perspective, outsourcing globalization is the result of leveraging overseas potential and becoming a similar source for other overseas clients. Being part of this ecosystem allows companies to enhance their offerings to customers – not only in one country but also on a global scale.
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The importance of purpose when it comes to offshore outsourcing
Outsourcing and globalization are most powerful when a clear sense of purpose underpins the relationship. This purpose guides companies to make informed decisions that will benefit their companies and clients.
For some US business owners working across the global landscape, outsourcing can enable them to create innovative services, ideas, or products. They can tap into the skills of third-party providers that they choose to outsource. This way, they can quickly garner industry-leading solutions for their customers and stay ahead of their competition.
Other companies might consider the benefit of outsourcing to bridge any skills gaps they feel their businesses have. For some, this might be limited data entry, technology knowledge, or how to streamline social media campaigns. When they outsource, however, they can quickly get services that will enhance their operations.
Sometimes, the appeal of offshore outsourcing comes down to cost savings. There is no need to budget for additional in-house staff if an outsourced partner already has all the resources needed to complete a specific project or expectation.
Whether this comes down to procuring raw materials for production or other functions that companies might need to fulfill the needs of their clients, offshore outsourcing to regions such as South Africa can be the game changer that a company needs in the competitive business arena.
Considering the ethical impact of globalization and outsourcing
Outsourcing globalization comes with some challenges for business owners. Operating in the global landscape must be distinct from the ethical responsibilities that a company has.
When working with outsourced partners, a business needs to consider what the working conditions of an outsourced partner look like, whether they have satisfactory payment structures, and how staff are treated overall.
If a company is associated with a third-party provider known for treating staff poorly or exhibiting unethical behavior, it could negatively impact its bottom line. Companies that do not actively distance themselves from unsavory external providers run the risk of losing credibility in the eyes of what could be their most important customer.
On the other hand, if a US business provides outsourced services that are not above board regarding staff treatment, they risk losing business.
Ultimately, an outsourcing partnership must have high trustworthiness and be ethical throughout. These key factors will ensure better product and service delivery, ultimately benefiting the reputations of both parties.
What are some constraints of offshore outsourcing and the globalization of US services?
Despite the many benefits that outsourcing can provide businesses, some US business owners might hesitate to use this model as part of their business strategy.
A typical concern is the loss of complete control from working with partners in other countries. A business owner could be reluctant to adopt outsourcing to a global partner due to the perceived notion they will need help to monitor quality or be able to get high-quality outputs.
Companies needing to become more familiar with the technology required to communicate effectively with third-party providers in other countries might feel that outsourcing might not be in their best interests.
Also, lacking trust might make some business owners feel they cannot outsource important payroll or recruitment processes. This is not necessarily the case, as skilled outsourced partners can effortlessly manage projects and tasks with high levels of responsibility.
There are also some internal obstacles regarding any economic implications for employees. Some staff members might resist outsourced tasks – especially if they feel their job functions might be negatively impacted. They might be concerned whether their job functions could be funneled to other countries and if they would be demoted or even fired.
How to navigate global service delivery when outsourcing is part of your business model
Focus on clarity in internal communications
If you decide to embrace outsourcing in your business, it is essential to let staff know that even though there might be some operational changes, this will not affect their positions.
You can use this opportunity to figure out where there could be growth opportunities for your staff within the business and how you can help employees retain high satisfaction in their roles.
Establish trust with stakeholders/third-party providers
Whether you are enlisting the services of an outsourced partner or stepping into the role of an outsourced specialist, it is essential to lay the foundation of trust from the start.
Provide clear and secure communication channels and ensure all expectations for service delivery are clear. This will keep miscommunication at bay as well as any uncertainty.
Seek out proven experts with good reviews
When choosing an outsourced partner, working with service providers that have achieved favorable client outcomes is vital.
Ensure that you have a clear picture of which providers would be a good fit for your business and customer, and take the time to reach out to find out more about their processes.
Don’t lose sight of your responsibilities
You must retain responsibility for your overall business strategy as a business owner. Certain tasks, such as those linked to business financial decisions, operational costs, or which suppliers to work with, still need to be part of your core job functions.
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Understanding the impact of outsourcing and globalization
Global businesses that leverage the success of offshore outsourcing are in a prime position to compete in the global market.
There is an improved opportunity to become more agile and flexible when working with offshore teams. Operations can quickly adapt to change, no matter which country or region your core business unit is in.
Organizations can enhance their capabilities as service providers, making hiring outsourced partners a viable economic decision.
Is there a place for outsourcing in the global economy?
The world economy can undoubtedly benefit from companies outsourcing projects to third-party providers. Any task that is suitable for outsourcing creates an opportunity for job creation.
Now, skill sets are not limited to regions. A company can be better positioned to generate service delivery to customers’ calls – with talent from anywhere in the world effectively bringing the right experience to projects.
What developed countries can learn from tapping into offshore outsourcing
The outsourcing ecosystem of the manufacturing industry is much more than just a hub of lower operational costs.
It allows a business to remain competitive, tapping into benefits such as the latest information technology and innovative product developments.
Where globalization and outsourcing genuinely come into their own is that these partnerships allow countries to reach out to global markets as well. When an outsourced partner of specific products is used, businesses can consider expanding to the business areas where these partners are based.
Working with providers in the global economy can also enhance your knowledge of specific overseas markets, allowing you to make viable business decisions for your company.
Additionally, your business can compete as a viable role player in your industry. Working with suitable suppliers will put you in a prime position to navigate the competitive global business arena.
This will allow you to enhance your business’s overall health and financial security – for your current staff.
International trade and the future impact of outsourcing globalization
Looking at its impact on the American (and global) economy and international trade, outsourcing globalization certainly has a ripple effect.
Outsourcing in the global market can put your business at the forefront of innovation. It can put your company in a better position to leverage and develop new technology, which is especially important when considering the rise of artificial intelligence (AI) in our everyday business environments.
However, it is essential to consider that the continued rise of the outsourcing industry in the global economy could elevate competitiveness in the world – especially considering that even white collar jobs can compete in this arena. Companies need to form strategic partnerships with access to top global talent.
Another potential future outcome is that managers will be in a better position to focus on their business strategies and improve their leadership skills. The latter also pertains to global leadership roles, where managers can tap into opportunities to work with foreign workers across the world.
Globalization and Outsourcing – Final thoughts
Offshore outsourcing and the globalization of US services are set to continue transforming the business landscape as we know it. Businesses are now unrestricted by borders and can easily collaborate with those partners that suit their business needs.
On the other hand, US businesses that provide outsourced services can enhance their service profiles as they build their dedicated client bases across the globe.
Furthermore, when partnerships between companies and third-party providers are underpinned by trust and expertise, there is ample opportunity for business growth and prosperity.
Offshore outsourcing needn’t be seen as a threat. Rather, it is a strategic investment where business owners can reach out to talent across the globe and get the valuable skills they need to enhance their business prospects.
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