Look Into the Practice of Offshoring Essay

726 Words Oct 20th, 2011 3 Pages
Karina Yanisa
Professor Christopher Robert
Management 4020
1 May 2011
Look Into the Practice of Offshoring
According to the book Fundamentals of Human Resource Management, offshoring is the practice of “moving operations from the country where a company is headquartered to a country where pay rates are lower but necessary skills are available” (Noe et. al. 41). The practice of offshoring in the United States dates back to as far as 1970s. It begins with the practice of outsourcing, which, according to the book is “the practice of having another company (vendor, third-party provider, or consultant) provide services” (Noe et. al 40). By outsourcing work to a third party which actually specializes in the field of service, a
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In a survey done by Booz Allen Hamilton from Duke University, only 40% of companies mentioned access to qualified personnel as their drivers of offshoring jobs in 2004. However, that number rose to 77% in 2006 (Green, 2007). This proves that quality aspect has also become one of the primary drivers in offshoring jobs other than cost savings. As the world is becoming more global, organizations now have access to a bigger pool of talent. Overseas workers are just as qualified or possibly more than US workers, and they cost less. Of course, from the viewpoint of the company, this provides very significant economic benefits.
The benefits from offshoring would need to be balanced by the negative sides. Among the drawbacks in offshoring are cultural barriers and the loss of US jobs (Green, 2007). Each culture has its own values and norms, and cross-cultural communications are undoubtedly hard. Without enough commitment to understand each other, cultural barrier can cause miscommunications and even conflicts. The loss of US jobs has also been debated about for a long time. Is it ethical to take away jobs from US citizens and hand them to overseas workers for lower costs? Economists argue that this practice does not hurt US economies. In fact, it helps US economies by providing gains from trade, as stated by the Law of Comparative Advantage. But in times of recession such as now, politicians have argued that the job loss

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