The Effect of Outsourcing on IT Careers

free essayIn the present day business environment, both large scale and small enterprises are increasingly relying on outsourcing to perform some of their business operations. Outsourcing entails delegating some in-house business processes to an outside service provider, after which the outside service provider is liable to run and maintain the business process that has been outsourced. According to Gnuschke et al. (15), business process outsourcing offers both long and short term solutions to the issues of business operations deficit. Some of the most commonly outsourced business functions include logistics and distribution, recruitment of employees, management of accounts, maintenance of IT systems and infrastructure, marketing and advertising, and web hosting. It is not possible for any organization to meet all of its needs on its own, which makes outsourcing the only practical solution. Regardless of the fact that there are other approaches that organizations can adopt in order to meet their needs, such as training their own employees, they are only effective in the long term and are typified by high costs of implementation, which are less likely to guarantee returns on investment. Various companies embark on outsourcing for the different reasons, such as not having the skills required to undertake the business process, the need to substitute a poor in-house service, not having internal resources required to undertake the business process, difficulties in managing the process due to business growth and expansion, and the fact that when the process is performed by an in-house team, there are no significant contributions to the competitive advantage of the firm. Besides, companies, whether large or small, should assess their outsourcing options before making a strategic decision to outsource part of its business processes. According to Barrar and Gervais (120), outsourcing has its advantages and disadvantages; as a result, companies must make sure that they outsource the right process, as well as the right third party providers. The impacts of outsourcing are not only limited to the organization, but also to the jobs in the fields of most commonly outsourced functions, which are mostly IT-related.

Effects of Outsourcing on the Future of IT Jobs

Outsourcing provides lucrative advantages the most organizations aim for without considering the effects it has on the careers related to the outsourced function (Gnuschke et al. 15). It is a common practice for manufacturing organizations to manufacture their products in other countries and import them to sell in their own countries. This provides a sure market, as the organization can sell its products in the two diverse markets; however, the expenses incurred in importing and final production processes before releasing them to the market are a major challenge. Many skilled personnel are denied the opportunity to skillfully apply their talents; instead, their jobs are given to another individual in another country. Despite the fact that it is cheaper in terms of the costs of outsourcing, the long term effects are more drastic. Outsourcing provides an opportunity for other countries to develop their skills and improve their knowledge in the different fields at the expense of the home country. Corbett (102) gives an example of Philippines. The country has turned its economy through their work in outsourcing. Corbett (105) says Philippines are now ranked the second fastest growing economy country in Asia after China. This gives a better impression to the development outsourcing gives to the countries that provide these services. With time, countries will be making better inventions in the global market, while others, who had the opportunity to develop their skills, lag behind. Thus, outsourcing provides an advantage to the country that provides outsourcing services, and cripples the job sector of the countries that rely on outsourcing its services. This means that the future of most jobs in the United States is on the verge of being shifted to other countries (Barrar and Gervais 102). As a result, far many job opportunities have been shifted to the third world countries, with an aim of gaining more from them. This leaves many citizens jobless and is a direct impact to the slow growth of the economy. Without better strategies of reducing outsourcing in the United States, more and more employees risk losing their jobs. Owing to the fact that most outsourced functions are IT related, IT jobs in the United States are most likely to be affected, following an increase in business practice of outsourcing. Essentially, there will be no employment opportunities for the IT graduates in the US, if companies continue to outsource IT functions to the developing countries under the disguise of cheap labour (Gnuschke et al. 16).

Global Effect of Outsourcing on Job Locations, Salaries, Wages and Job Security

Outsourcing has had significant impacts on the countries in terms of the job locations, salaries and wages, and job security. As mentioned earlier, companies normally opt for outsourcing their production jobs to other countries, which provide cheap labor and produce better products incurring better returns (Barrar and Gervais 89). McIvor (123) asserts that during the 2000s, big companies in the United States increased their overseas employment by 2.4 million, while reducing their work force by 2.9 million, which is a clear pointer of the relationship between outsourcing and domestic and foreign employment opportunities. This reflects the increased number of unemployment rates in the United States, which has been a major topic of discussion over many years. While the overseas employment grows, the United States’ employment force continues to diminish (Gnuschke, Wallace and Smith 100). Companies in the United States have, for over a long time, been depending on the services other countries offer in terms of outsourcing. Their dependence on a third party contribution makes it hard to completely deal with the unemployment menace in the US (Gnuschke et al. 17). Continued flourishing returns in the market are an attraction to the continued dependence on the outsourcing countries and organizations. In technology, most organizations have outsourced their production sections to other countries in order to be able to achieve better standards of goods in the market. Investors are putting up industries in the third world countries to increase their returns. Many first world countries opt for the developing countries to provide them with labor, as they are cheap, but this has led to the reduction of industries and employment in their countries instead. Barrar and Gervais’ (89) research shows that more than 400,000 jobs formerly in the United States were moved abroad and the trend is still rising. A large number of American citizens in the long run have lost their job positions, because companies are prioritizing on production at the lowest expenses. Companies compare salaries they pay their employees to the total amounts that they will spend in outsourcing the same services. This is an indirect reason for the companies cutting down the number of their employees.

McIvor (110) asserts that outsourcing is all about getting a job done at the minimum cost possible and saving on extra costs. This also affects the salary that most United States’ employees are entitled to. Organizations weigh the cost of contracting a third party to complete a task compared to the organization’s own staff members. Paying an outside country for its services is a direct factor to the economic downturn. It would be a better way to improve a country’s economic growth by spending its resources on its citizens, who give it back as taxes. Outsourcing poses a threat to the United States employment sector, as many employees are worried of losing their jobs. This has also been attributed to the increased rate of unemployment in the United States. Most organizations are interested in professionals and medium skilled employees only. This means that the casual workers in many organizations are being replaced with employees from the foreign countries resulting in a lose-lose scenario for the American government, American firms, and American employees, because of the fact that outsourcing has played a pivotal role in bringing about high unemployment rates in IT jobs, as well as significant dip in the enrollments in IT-related careers.

The Future of IT-related Careers With respect to IT advancements versus Outsourcing

In the past years, many students chose IT to other courses, since it provided an opportunity for challenging tasks, it paid well, and it was marketable with many job opportunities. Outsourcing has made great changes in the IT fields. However, outsourcing has significantly reduced the prestige once associated with IT-related careers (Gnuschke et al. 17). This is only possible by involving other foreign countries, who have different and new ideas. With outsourcing, companies have been able to free up internal resources, improve customer focus by providing better services, and accelerate the companies’ organization and development. According to XX, the rates, at which companies are outsourcing IT jobs, cannot be compensated with the new advancements in IT. In any case, IT professionals are compelled to train foreign employees when advancements in IT occur (McIvor 125). An inference that can be made from this observation is that careers in IT are not a secure option, even with advancements in IT; this is because companies are placing more emphasis on cost control, and normally adopt any measure than can cut operational costs.

Instead of providing more job offers to the citizens of the US, other countries are developing more from the increased jobs outsourcing provides. Employees in the IT department are also getting low salaries compared to the outsourcing organizations that the country has given the responsibility of accomplishing their jobs to. This, in turn, means that while the number of jobs in the United States reduces, other countries are expanding their staff numbers to be able to attain the set goals of the jobs outsourced. IT services is the second sector outsourcing 43% of its services after manufacturing sector at 53% in the United States (Barrar & Gervais, 2006). Professional jobs inclusive of IT are the major tax generators of the economy in the United States. Outsourcing these jobs means that the economy of the country is on the verge of being affected in one way or another. Outsourcing of IT services poses a challenge of diminishing developments in the progression of the practice. United States has over the years been ranked the first in technological developments and advances, but outsourcing such key functions that the government can tap to increase its economy is a major threat. Corbett (125) concludes that both the economy of the country and the development of IT systems become weak with time. Despite the costs that are saved in outsourcing, the needs of the citizens are not prioritized first. The country that is contracted to provide outsourcing services does so in the manner they see fit. IT is a sensitive part of the United States government with the role it plays in the governance of the country. If these services be wrongly performed part of the governance system may fail. This is a prediction for reduction in the personnel studying IT in the major institutions within the country in the near future (Barrar & Gervais, 2006).

Outsourcing has proved to be very profiting, but the long term consequences that it poses are far worse. Outsourcing has seen the economical development of former struggling countries to economical stable status. Companies will opt for international outsourcing to accomplish their set goals, because of the advantages that outsourcing offers. As major countries are losing some major strategies in economic development, other countries with the capability of providing outsourcing facilities have the advantage of building their economies. Countries spend less on the resources used and wages and get more profits in the market. A number of sectors in the United States have been outsourced for more lucrative profits. These include manufacturing, IT services, distribution, and call and help centers. Despite the advantages that outsourcing provides for organizations, it still has disadvantages that are worse in the long run. The future in development of a country does not rely on the outside help outsourcing provides, but rather, on efforts a country puts in ensuring a stable growing economy. The economy of the United States is at a turning point considering the number of sectors that the country has vested upon outsourcing. United States’ citizens have lost their jobs and some still work with the fear of losing their jobs. Governments control their economy through the number of job opportunities that it provides for its citizens. The more job opportunities they provide, the better and stable its economy becomes. Thus, in securing its future economic status, the United States has a role in controlling the number of jobs that they outsource to other countries while building on providing more job opportunities to its citizens.