Offshore Outsourcing Essays

Offshore Outsourcing Essays Offshore Outsourcing Essay Offshore Outsourcing Essay The American Electronics Associations reports that 560,000 IT Jobs were lost in calendar year 2001 and 2002, roughly 10 of the total Information Technology work force and the numbers are growing. More overly, 30 of all new Information Technology work for U. S. Companies is now done abroad, mostly in India. In the U. S. , the average salary is around 50,000 for an average Information Technology worker, though overseas its very different. Conversely, the salary of an Information Technology worker in India is a fraction of the cost and triple revenue. As a result many small and mid-sized companies alike are sending their Information Technology work offshore, so that they can reduce operating costs. Statement of the Problem This study explores Offshore IT Outsourcing by U. S. Companies. Within the study, information will be provided on the details of Offshore IT Outsourcing including the advantages and disadvantages. It also evaluates different strategies for offshore Information Technology Outsourcing that could benefit both U. S. Employees and employers. This study utilized qualitative information provided by a number of agencies that monitor and track on the performance of Offshore Outsourcing. Within this study, library resources include electronic and computer database searches. As we move toward a purely global economy, many U. S. Companies look for opportunities to gain a competitive edge. Offshore Outsourcing appears to be the answer. Offshore outsourcing is the consumed. Executives of many U. S. Reparations feel that the only way they can remain competitive is to rapidly reduce their operating costs thereby increasing their profit margins. Finding cheaper sources of labor is one way to reduce operating costs. Unfortunately, these sources usually reside outside of the United States. Offshore Outsourcing is no longer the wave of the future it is the current direction most businesses in virtually every industry are focused. While companies are rewarded for reducing their costs, it has resulted in the displacement of a large percentage of U. S. Technical workers, skilled and with specialized training. Main Research Question The main research question is What is The Impact of Outsourcing Information Technology Information Technology Offshore Sub-Research Questions The sub-questions are What is Information Technology Offshore Outsourcing What are the advantages and disadvantages of using Information Technology Offshore Outsourcing How can employees and employers benefit from Information Technology Offshore Outsourcing Significance of the Study This study is important due to the following implications of the American economy Economic Implications, which include Increase in unemployment and underemployment rates and as a exult of displaced employees. Reduction in domestic investment because work is sent to other countries. Ultimate dependency on other countries to provide highly skilled technical resources. Political Implications, which include Unemployment is a major political issue. Politicians often use this issue for re-election purposes. Many politicians are afraid that they will be voted out if they support sending Jobs offshore. Party Politics Debating The issue of party politics is ongoing. The two major parties (Republicans Democrats) are heavily debating over who cares the least about the employed and underemployed. Social Implications, which include Reduction in the need for local technical expertise. Students will be diverted from these areas of education resulting in a lack of knowledge and advancement in education in the information technology field. Increase in the number of corporations leaders that show more interest in the bottom line versus the welfare of their employees. The content of this study will address the advantages and disadvantages of offshore Information Technology Outsourcing and the impact it is having on our economy and the workforce. Research Design and Methodology This study utilized qualitative information provided by a number of internet Journal articles that report on other studies that monitor and track the performance of Offshore Outsourcing. Within this study, library resources include electronic and computer database searches. The mission of this research project is to inform others on the activities and use of Offshore Information Technology Outsourcing. Understanding should be gained from the answers of the three sub-questions related to the main research question on Offshore Information Technology Outsourcing. Resources such as reading existing literature, work experiences, and economical and global perspectives allowed the researcher to form a personal perspective, conclusion, and recommend solutions. A number of recent articles were referenced to provide information on how offshore outsourcing is being conducted by businesses across the United States. Results from other studies on offshore outsourcing were reviewed to understand the feedback of companies. Lastly, personal experience in working with Offshore Outsourcing team was relied upon to support the results collected from literature reviews. Offshore Outsourcing is no longer the wave of the future it is the current direction most businesses in virtually every industry are focused. Many companies using offshore outsourcing have reported that they have experienced at least a 30 to 40 cost savings as a direct result of offshore outsourcing. When offshore outsourcing first became a trend, it resulted in the displacement of a large percentage of U. S. Workers, skilled and unskilled. As offshore outsourcing evolves, leaders of organizations are learning to leverage their offshore resources while transitioning their current employees to work on corporate opportunities in the business strategy that concentrates on market growth. Corporations use offshore companies to perform tasks that have been refined onshore, and they try to redirect their freed up staff toward new targeted areas. As a result corporations profits intention to rise without a reduction of workforce. This has shown to help companies to grow tremendously as they find ways to uncover new opportunities that allow them to expand into different markets. The phrase used to describe this use of offshore resources is termed transformational outsourcing. Many executives are discovering how offshore outsourcing can be focused on corporate growth, finding better ways to use skilled U. S. Staff, and creating new Jobs in the U. S. , not Just cheap wages in other countries. One executive stated, True, the labor savings from global rouging can still be substantial. But its peanuts compared to the enormous gains in efficiency, productivity, quality, and revenues that can be achieved by fully leveraging offshore talent. One example in the use of transformational outsourcing is the organization, Chapman. The company turned around its dying businesses and accelerated its pace of innovation by using offshore resources to reduce cost and applying those cost savings to fund development projects that otherwise would have been unaffordable. As part of its turnaround strategy, the president of engineering revives shifted some design work to its 160-engineer center in Achaean, India. By having U. S. ND Indian designers collaborate 24 hours a day / and 7 days a week, they projected that they would slash development costs and time and win orders often missed due to engineering constraints. This article provided examples on how transformational outsourcing works very well in every industry with exception of Information Technology offshore outsourcing. The reason is probably because when Information Technology offshore outsourcing is implemented, in most cases it completely replaces all functions that are performed by U. S. Information Technology Staff and moves the processes, staff and environments offshore. It is similar to buying a complete Information Technology solution with integration only between the offshore service provider and the business customer. The type of Information Technology work sent offshore includes, but is not limited to network and security administration, application development and implementation and helpless purport and research and development of software products. Countries that are renowned for having inexpensive technical specialties in these areas are India, and most recently the Philippines and China. These countries state that they have the worlds highest technically skilled human resource base. What are the Advantages and Disadvantages of using Offshore Information Technology Outsourcing While opposing sides of Information Technology Offshore Outsourcing debate on lower operating costs experienced by company owners versus unemployment experienced y their employees, there are other major pros and cons as detailed in the next sections. Advantages of using Offshore Information Technology Outsourcing Overseas Innovation The Faux Study put on by Duke University in collaboration with consulting firm Bozo Allen Hamilton contained results from a survey of 537 companies in the U. S. And Europe. The study key finding was that one of the major reasons for offspring Information Technology is due to the difficulty in finding tech talent in the United States. The 2004 survey showed results of less than 40 percent of Impasses cited access to qualified personnel and the number increased to 70 percent in 2005. It is believed that the reduction in technical talent is a result of the sharp cut in temporary work visas and declining enrollments in U. S. Science and engineering programs, especially at the masters and doctorate levels. The issue no longer is cost but availability of talent. The data is very clear on this, stated Rare Lenin, a Duke Business professor who led the Faux study. A significant talent gap has risen between 1995 and 2006, and thats a problem for companies that depend on engineering talent. 4 Hours a day and 7 Days a Week Access Multinationals corporations that need operations going 24 hours a day and 7 days a week have found it advantageous for strategic reasons to outsource offshore. They have found that by sending Information Technology Development offshore they can shrink product-development times by working 2417 using tech centers around the world. They have also found that it is easier to provide 2417 helpless support. Refocus Employees on Core Competencies of the Organization Technical Managers have reported that they feel there are more than enough technical opportunities in the United States and that many of the companies mainly are going abroad to free up their employees to work on the organizations core competencies. They conclude that there is a major qualitative difference between technologist in the U. S. And in developing nations. Consequently, they are sending routine work offshore and freeing up their employees to work on such things as research, conceptual design, customer interactions, or business analysis. Disadvantages of using Offshore Information Technology Outsourcing Breaches in Mallard Security Mark Willoughby, tutor of the Hidden Mallard in Offshore Products Raises Concerns says that currently, the United States National Security Agency is spending millions of dollars to have potential mallard code that has been developed offshore in a global software marketplace thoroughly regulated. By definition, mallard code is similar to a virus that has been hidden within layers of modules and complex applications for the purpose of creating backdoor to other more sensitive data Mallard is a problem that the offshore outsourcing companies are facing with the software that is coming o America. According to Willoughby in 2003, the threat of hidden Trojan horses and back doors surfaced when the government of the U. S. Announced plans to strengthen national security policies covering information processed by applications written in the global software marketplace The National Security Agencys information assurance director, Daniel Wolf, in testimony before the House Select Committee on Homeland Security cyber security subcommittee, called for a federal lab that would find malicious software routines that are designed to morph and burrow into critical applications Mallard is interlinked with outsourcing, because of their products produced are sometimes are infected by these viruses when they enter into the U. S. Borders and that is definitely a disadvantage. The United States needs to seriously re-evaluate the laws around offshore outsourcing. Other countries have placed limits around the use of offshore outsourcing. For instance, the State Council of the Peoples Republic of China in August of 2003 directed all government ministries to buy only Chinese software in the next upgrade cycle in an effort to not only encourage the development of local software companies but also to protect sensitive government data China should serve as an example for the United States to tighten limits around offshore outsourcing to improve its economy and strengthen national security. Breaches in Data Privacy In addition to breaches in security that result from mallard, privacy of data is also at risk. Earlier this year, a report circled the globe concerning confidential customer data that had been stolen and used to conduct fraud. Police in Bangor, India, reported the arrest of the chief suspect in the theft f funds from a score of customers of HISS bank in the I-J. The suspect is being charged in India with stealing customer data that was sent to his accomplices in the I-J. As a result funds were withdrawn from customers HISS bank accounts. It was later learned that a proper background check before allowing the suspect to access customer data was not performed. Standards of privacy are often neglected in countries like India because its a close-knit society where, say, reading someone else e-mail wouldnt be considered much of an invasion. In 2005, police in India