Advantages and Disadvantages of Outsourcing in a Global Context

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Introduction
In the current global business state of affairs, outsourcing is one of the major trends being
followed by the contemporary business entities. This process refers to the transfer of the partial
job responsibilities to the external or third party vendors for value. In the recent time, the process
of outsourcing is initiated to gain competitiveness in terms of cost leadership. This is due to the
reason that with the help of the outsourcing strategy, manufacturing and outsourcing cost will get
lowered (Chen and Xiao 2015). However, the extensive approach of the outsourcing process is
also putting a number of disadvantages that might pose challenge not only for the businesses for
also for the global political economy. Thus, it is important to review both the advantages and
disadvantages of outsourcing and the role it plays in a global context.
This essay will discuss about the major advantages and disadvantages for outsourcing and
how it is affecting the global economy on the basis of a few practical references.
Advantages of outsourcing
One of the major advantages of outsourcing is being gained by the developing and
underdeveloped countries. This is due to the reason that with the initiation of outsourcing, large
scale companies based in the developed economies transferred their job roles to the vendors in
these countries. The average cost of resources such as human resources in the developed
economies is significantly more compared to that in the developing and underdeveloped
countries (Dutta, Gwebu and Wang 2017). Thus, outsourcing the jobs to these countries is
helping the companies in saving cost of resources. For example, India and China are the two
leading developing economies in the world and are the major players in attracting the global
outsourced jobs. This is mainly due to the reason that these countries are the top two countries in

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the world in terms of population and thus the availability of skilled employees at lower cost is
adequately available. In this case, organizations such as IBM and Vodafone are outsourcing their
customer service process to the vendors in these countries and incurring lower costs.
On the other hand, another major advantage of outsourcing is the increase in the
employment levels. This is due to the reason that the more is the outsourced process from the
outer countries, the more will be the employment of the local workforce. This is further
enhancing the national economy of the countries majorly the developing countries. For example,
the IT sector of India and China are the major contributors in the national GDP of these countries
(Dolgui and Proth 2013). The market condition of the developed countries is also getting
improved by the outsourcing process due to the fact that end products are being offered in more
competitive pricing to the customer and cost effectiveness is being gained. This can be
concluded that mobilization of the global workforce and holistic economical development is
getting possible by the help of outsourcing. Underutilized resources from the backward
economies are getting leveraged with the help of the outsourcing process. This should also be
noted that with the help of the emergence of outsourcing process, associated responsibilities of
the business will also get reduced and it will be beneficial for the business entities to better
concentrate on their core processes (Tjader et al. 2014). This can also contribute in the long term
business development. It can be concluded that in the current competitive business state of
affairs, gaining cost leadership is important for the business organizations and outsourcing is one
of the most effective processes of gaining it. In addition, this is also helping the less privileged
countries in competing in the global scenario and gain advantages with their available resources.
Disadvantages of outsourcing