Outsourcing: Staying Competitive in the Global Market

Abstract

As more companies expand their business globally, they are seeing more opportunities and an increased set of threats to the market. Threats like war, political revolutions, new currencies, and natural disasters can affect growth and political stability throughout the world, so in order to successfully compete in the international market more companies are faced with the decision of relocating part of their operation offshore. This paper will address what key elements companies in this situation need to address, such as, quality of customer service provided, security of confidential information, and the possibilities of cost savings, in order to be sure that outsourcing is the best solution for their company.

Outsourcing to Stay Competitive

For companies to stay competitive in today’s global market, many are facing the decision to outsource sectors of their company. By taking a part of their business offshore, a company can lower their bottom line and enter markets they were not able to reach before. However, many questions need to be answered before a company decides to move an entire sector of their business offshore. They first need to look at how security will be handled. Will they be able to trust an overseas subcontractor with valuable information about both their company and their customers? What measures need to be in place to ensure that this information is handled properly? A business considering outsourcing also needs to think about how this will affect the level of customer service their customers expect. Will their customers be able to understand and feel comfortable talking with a non-native English-speaking representative? Also, will that representative give the same level of customer service as someone in your home office? Finally, is outsourcing a company’s best way of cutting costs? Will it actually lower their overall costs or will it create more by moving a part of their business overseas? Organizations need to explore the advantages and disadvantages of important outsourcing issues such as customer service, security, and fiscal impacts, to determine if this strategy will improve their competitiveness in the global market.

Security

Outsourcing is an attractive option for organizations who desire to reduce costs. However, there is a large security risk associated with outsourcing and organizations must determine if the benefit of cost savings is worth it.

There have been many instances of security breaches by companies who provide outsourcing services to organizations from primarily the United States and Great Britain. Recently, Jolly Technologies realized that an employee from their Mumbai, India location had uploaded source code to their personal Yahoo email account. Executives tried to get the Mumbai Police to start an investigation, but they insisted that there was no evidence of theft and refused to look into the matter any further (Ribeiro, 2004). Apparently, prior to opening the facility in Mumbai, Jolly Technologies consulted with lawyers from India and were told that there are patent, copyright, and intellectual property (IP) protection laws in place, however they failed to inform them that they are almost impossible to enforce (Ribeiro, 2004). Another example that revived fears of confidentiality occurred when a Pakistani remote worker threatened to circulate medical records on the internet (“The remote future”, 2004). These are just a few of the numerous instances of confidential information getting into the wrong hands. Some can argue that this could happen anywhere, even the United States. However, there are cultural differences between the United States and those countries in which provide outsourcing services. These countries, such as India and China, tend to have a more relaxed attitude to privacy, which can lead to serious consequences (Pruitt, 2004).

Companies that decide to outsource need to have measures in place to ensure that confidential information is handled properly. “Companies are advised to train staff overseas to adhere to the company’s global privacy standards, and to check into the risk of government interception of sensitive confidential information” (Pruitt, 2004). Organizations may also want outsourcing providers to require background checks for their employees. Just because the country has IP laws does not mean they will be enforced so it may also be wise to put the responsibility of security on the outsourcing provider by requiring monetary compensation if a security breach occurs.

If outsourcing is a strategy organizations want to pursue, security should not be taken lightly. The consequences of a security breach could be disastrous in terms of losing

intellectual property to a competitor or loss of customers due to their