Global Outsourcing and a Company's Financial Strategy

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Global outsourcing, also called offshoring or offshore outsourcing is a process whereby companies transfer functions into another country. Basically, a local company opens up a new branch, partners with another country, does direct outsourcing (i.e. internet based), or simply relocates in order to do business there. Companies choose to outsource for a variety of reasons that include: a. sharing and exchanging of information-For example, a country is able to benefit from increase technology due to the presence of a foreign technological company there. In that case, outsourcing becomes a great medium for human growth and development. b. fostering international competition-International trading allows consumers to benefit from lower product costs due to the lower costs of the trading itself. c. creating global wealth-the process assists other countries in developing their own technology and resources by providing them with increase product knowledge as well as financial assistance through processes such as job creations/international division of labor. d. increasing sales by accessing foreign markets, making their products available to wider audiences. e. the main reason companies practice outsourcing is to save money either on the costs of raw materials, on overhead costs, or on the costs of labor altogether.

Today's economy has affected how individuals and businesses view outsourcing. Many businesses have to practice outsourcing because that is their only option for remaining viable. Also, anti sentiments for offshoring are slowly beginning to fade as many individuals are beginning to realize its importance in helping companies keep their doors open locally; as a result of those companies remaining viable, local jobs are able to exist and/or be preserved. Also, offshoring promotes the availability of cheaper products-because these products cost much less to make, they also end up costing much less to buy, this in turn results in customer savings. In those cases, outsourcing becomes a win-win situation. However, global outsourcing, like many other ventures, can have its pitfalls if not carefully planned due to factors such as international trade laws, political instabilities, custom issues, cultural issues, decreased productivity, loss of manufacturing control, etc...The company that chooses to outsource must also ensure that the company's mission, vision, and goals will still be upheld even in international territory. After all, a company's decision to outsource is normally based on its mission and goals, whether it involves more production, less costs, or others.

Though global outsourcing may benefit a company in many ways, not everyone ...