How much are the Companies in the U.S. Really saving when they outsource to The Phillipines and India. It seems like everytime you call customer service or tech Support you get someone overseas. I am tired of all this thick accents and I have to explain like 10 times. Even things that are simple. These people are well Intentioned citizens but Why is Hewlet Packard and American Express doing this?
2006-11-04 18:21:19 · 5 answers · asked by erik 2 in Business & Finance ➔ Corporations
I can answer this question from the viewpoint of Software engineering. Essentially many companies are outsourcing their development efforts to places like India and China. The main reasons are that it 'appears' to be cheaper and you can dump the unneeded tasks such as maintenance of old legacy code, development of really uninteresting software and keep all the really interesting tasks and intellectual property back home. However i believe this to be false economy.
In my experience in dealing with Indian companies i found that very often these type of outsourced tasks are performed by trainee developers recently graduated from Bangalore university. These people are used on such project to cut their intellectual teeth to enable them to pretend to be more experienced than they really are. The work performed is often seriously substandard and it is often the companies employees not the out sourcing company that has to integrate this poor quality work. It can be likened having a company build your house and then you have to finish the foundations yourself.
Certain studies in the UK have indicated the real saving as only 15%, but if you also add the additional project management effort by salaried managers and additional support work of project staff such as SCM, testers, Integrators,builders not to mention support ing processes that need adding to projects. I believe the savings to be miniscule.
The biggest impact though I believe is going to in future product development . Many companies have let go of their experts as they have farmed off their particular projects to India. When there is a need to perform future development in these areas they will find they are a the mercy of the outsourcing company who will be able to charge what they want and the company will no longer have the expertise to do their own. I can think of several big corporate Communications companies in the US who are in this position.
2006-11-04 22:50:08 · answer #1 · answered by Vengeance_is_mine 3 · 0⤊ 0⤋
If their is a way to save money, companies usually lean to that idea. In this case, the companies earn their usual sales profit, but they pay less for labour costs, which give them the benefit of a higher profit margin. Plus, since these countries (e.g. India) have a high population rate, the un-employment rates decrease. And they can offer cheap labour.
2006-11-04 22:26:04 · answer #2 · answered by The_Sleeper 1 · 0⤊ 0⤋
Cheap labor, no benefits or insurance, hourly wages ridiculous.
I know what you mean when calling any customer service numbers...no disrespect to these people, but I can't understand a single thing their saying! It gets beyond frustrating!
This is one thing that we as Americans must pull together on, outsourcing is killing us! If you haven't loss a job do to this then you probably know of someone else who has.
2006-11-04 18:35:39 · answer #3 · answered by nobodyuknow 3 · 0⤊ 0⤋
Because they can and they save money..that simple everyone is wanting to save a buck these days they don't care about jobs here anymore or the economy just about what they have in their pocket.
2006-11-04 18:24:08 · answer #4 · answered by sammy 6 · 0⤊ 0⤋
Cheap labor and better income to the company. That is about all...the paradox of globalization.
2006-11-04 18:23:40 · answer #5 · answered by savio 4 · 1⤊ 0⤋