Evaluating Global Outsourcing

Evaluating global outsourcing

Introduction

In the last two decades, there has been an increasing trend towards outsourcing by firms mainly in most of the developed countries. There are many terms that are used to describe outsourcing like de-verticalization, dis-integration, farming-out, subcontracting and so on. According to Lei and Hitt, outsourcing has been defined as the reliance on external sources for manufacturing and also other value-adding activities. Research states that outsourcing began with manufacturing which was conducted so that the cost after the Great Depression could be reduced. The term outsourcing became popular in U.S at the beginning of 21st century. Today it is a very common practice among organizations to pay for a business process instead of making it available internally (Contractor, et al., 2011).

Globalization has been a major factor that has accelerated global outsourcing. Due to globalization, countries have become more connected and strong networking have led to information, business and currencies to be available more easily to different parts of the world. Globalization by accelerating the process of global outsourcing have helped many developed nations of the world like U.S, U.K, France, Germany and many others to further strengthen their economy. However there are always two sides of a coin. The other side of global outsourcing is loss of jobs and insecurity which has also affected the stability of the economies.

In this paper we will highlight the various theories of global outsourcing and study its effect on one of the developing country that is United Kingdom. Further we will assess the pros and cons of global outsourcing on the political and economic impacts of the country. Finally at the end after the analysis, we will provide our recommendations of whether global outsourcing should be continued or whether a law should be passed to stop this process.

Concept of global outsourcing

Global outsourcing is responsible...