Do Companies continue to outsource during this type of economy?

Outsourcing in this Economy?
Does Outsourcing help you?
During the last few years the economy has faced rough patches around the world, impacting the US economy as well. Companies have encountered difficult decisions to make about its future. In fact, Payroll is one of the company’s major expenses. How can a company save money in payroll and still satisfy its customers’ needs? Outsourcing jobs offshore saves the company’s money while increasing efficiency and it helps the company focus on its core business.

 

What do economists say about outsourcing? “Economists refer to this process of turning to those who can produce a product or service at a lower marginal cost as ‘comparative advantage’, and it’s the key ingredient to an efficient and productive economy.”

Small companies cannot afford “to match in-house support services” that big companies have. For instance, “General Electric Chief Executive Jeffery Immelt… told the Wall Street Journal [in 2011] that 30 percent of GE’s business was overseas in 2000; today it’s 46 percent, and the majority of GE’s employees are now overseas”(Mathews,2012). Small companies have the opportunity to act as a “big” company in order to reduce or manage its expenses.

 

Benefits of Nearshoring
Nearshore to Mexico
InternationalThe benefits of nearshoring vs offshoring are many and include the following constructs of proximity: geographic, temporal, cultural, linguistic, economic, political, or historical linkages.

Proximity:

Most outsourcing companies are located thousands of miles and many time zones away. Mexico as an option for offshoring is simply smart.

Infrastructure/Security:

Mexico shares much of the same telephone networks and Internet infrastructure with the US.

Cultural compatibility and professional affinity between the two countries:

Many professional and technical staff are bilingual in Mexico. Using English- language textbooks and support manuals.

 

 

 

Mathew, Merrill. (February 2013). Companies ‘Outsource’ Because that’s where the Sales Are. Forbes. Retrieved from      http://www.forbes.com/sites/merrillmatthews/2012/07/20/companies-outsource-because-thats-where-the-sales-are/

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