The Role of Outsourcing in the Global Economy: A Critical Analysis

This research project critically analyzes the role of outsourcing in the global economy, exploring its positive and negative impacts on businesses and nations. It examines the motivations behind outsourcing, global trends, and the key benefits and drawbacks associated with this practice. The study utilizes a secondary research methodology, drawing insights from peer-reviewed articles, journals, and books to provide a comprehensive understanding of the subject. The findings highlight the significant role of outsourcing in driving economic growth, fostering innovation, and creating job opportunities, while also acknowledging the potential risks and challenges associated with it. The research concludes by offering recommendations for businesses and policymakers to navigate the complexities of outsourcing and maximize its benefits while mitigating its negative consequences.

ROLE OF OUTSOURCING IN GLOBAL ECONOMY

Table of Contents
ABSTRACT........................................................................................................................2
1.0 INTRODUCTION.........................................................................................................3
1.1 AIMS AND OBJECTIVES........................................................................................4
2.0 LITERATURE REVIEW...............................................................................................6
2.1 INTRODUCTION......................................................................................................6
2.2 OUTSOURCING AND ITS ROLE IN GLOBAL ECONOMY....................................6
2.3 GLOBAL TRENDS IN OUTSOURCING..................................................................9
2.4 POSITIVE ROLE AND IMPACTS OF OUTSOURCING IN GLOBAL ECONOMY11
2.5 NEGATIVE ROLE AND IMPACTS OF OUTSOURCING IN GLOBAL ECONOMY
.....................................................................................................................................13
2.6 CONCLUSION.......................................................................................................15
3.0 RESEARCH METHODOLOGY.................................................................................16
3.1 INTRODUCTION....................................................................................................16
3.2 RESEARCH PHILOSOPHY...................................................................................18
3.3 RESEARCH APPROACHES.................................................................................20
3.4 RESEARCH DESIGN............................................................................................21
3.5 RESEARCH METHODS........................................................................................22
3.6 DATA COLLECTION METHODS..........................................................................22
3.7 MEASUREMENT ISSUES.....................................................................................23
3.8 BENEFITS AND LIMITATIONS OF SECONDARY DATA RESEARCH...............24
3.9 SAMPLING.............................................................................................................25
3.10 ETHICAL CONSIDERATIONS............................................................................26
3.11 CONCLUSION.....................................................................................................26
4.0 DISCUSSION AND FINDINGS.................................................................................28
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5.0 CONCLUSION...........................................................................................................39
6.0 REFERENCES..........................................................................................................42
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ABSTRACT
Today is the world of outsourcing and many of the top multinational organizations in this
contemporary world exploit the procedure of outsourcing in order to achieve their
organizational goals and objectives. The following research project depicts the
outcomes of research on the role of outsourcing in global economy. The role of
outsourcing is highly imperative and thus it has both positive as well as negative
impacts on the global economy. There is a wide range of multinational organizations
present in the international market that carries out the process of outsourcing within
their workplaces so as to gain an assortment of diverse benefits of this notion. The
subsequent research report depicts the outcomes of research that has been carried out
to analyze the role of outsourcing in the global economy. There is an assortment of
different research methodologies present that can be used to accomplish the aims and
objectives of a research, but the research methodology that has been used in this
research study is “secondary research”.
In the methodology of secondary research, the peer reviewed articles, journals, books,
and literatures of the several well-known researchers from all across the world have
been critically evaluated and their outcomes have been utilized for the findings of this
research study. In the literature review section of this report, the peer reviewed
literatures that are proposed by the researchers regarding the topic has been analyzed
critically and deliberated. The next section of this research study depicts the research
methodology and an assortment of different aspects that are allied to it. In the section of
research methodology, the different facets such as; sampling, data collection, ethical
consideration, research design, measurement issues, research philosophies, research
approaches, benefits and limitations, etc. has been critically assessed. This research
study most appropriately explains about the concept of outsourcing and its role with
respect to the global economy. The positive as well as negative impacts of the
outsourcing on the global economy has been also effectively discussed and explained
with examples in this subsequent research study.
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1.0 INTRODUCTION
In business, ‘Outsourcing’ can be defined as an agreement in which the part of an
internal activity of one organization gets contracted out to another organization. The
contracting out of activities from one organization to another includes non-core functions
of a company such as facility management, call center support, manufacturing;
business and operational processes such as claims processing, payroll processing, etc.
The following research project depicts the outcomes of research on the role of
outsourcing in global economy. The major motive behind carrying out this research was
to critically evaluate the positive and negative impacts of the outsourcing on the global
economy and the international market. The rate of outsourcing in the entire world has
been drastically enhanced in the last few years, and thus it became highly important to
analyze the changes that have been occurred due to the outsourcing in all over the
world.
The notion of outsourcing was derived from the American Glossary which was proposed
in the year 1981. The name of that American Glossary was ‘Outside Resourcing’. The
concept of outsourcing is very much similar to that of the concept of “Offshoring”, and is
thus many times both the terms get confused with each other. However both of these
concepts can be distinguished from one another and the following research project
portrays those differences between both the notions. For this project study, the research
methodology that has been utilized is ‘secondary research method’.
The peer reviewed articles, journals, books, and research papers that are published by
the well-known researchers of the world, are reviewed and analyzed critically for this
research study. The sources that have been used for the secondary research in this
project are highly reliable and valid as all the articles that have selected are peer
reviewed ones. The validity of the outcomes that are depicted in this subsequent
research study is very high, as the entire project is based on the secondary sources that
are the peer reviewed articles and journals.
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For this particular research study, all the ethics have been properly considered and the
details of these ethical considerations have been also deliberated in the further section
of this research report. The literature review on the topic has been also discussed in this
project. In the section of literature review, the summaries of the key findings from the
peer reviewed articles and journals have been discussed effectively. These articles and
journals are the research work of several well-known international researchers who
have carried out different researches on the same topic in an assortment of different
contexts. The studies that have been selected for the literature review to analyze the
role of outsourcing in the global economy are based on the mixed research
methodologies that have been carried out by the researchers from all across the world.
The last sections of this research project depict the discussion, findings, conclusions,
and recommendations of the project. In these sections, the overall outcome of the
research that has been carried out on the basis of secondary research methodology is
portrayed and has been discussed effectively. This following research project also
sought to critically evaluate the trends of outsourcing in the global business sphere with
respect to an assortment of different subsets. The importance of outsourcing in the
global economy has been also discussed in this following research project.
1.1 AIMS AND OBJECTIVES
There are several different aims and objectives of this subsequent research study on
the role of outsourcing. The research methodology that has been used to achieve aims
and objectives of this research study is secondary research. The major aim of this
particular research study is “To critically analyze the role of outsourcing in global
economy”. Along with this major aim of the research project, there is an assortment of
different objectives too that have been fulfilled in this subsequent research study. These
objectives of the research are as follows:
 To evaluate the impacts of outsourcing on the economies of different nations.
 To assess the advantages and disadvantages of outsourcing at global level.
 To critically review the secondary literatures related to the research topic.
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 To identify the changes occurred within the economy to the outsourcing of
different businesses.
In order to achieve the key aim and objectives of this research, the secondary data has
been utilized effectively and along with it the published articles, journals, and literatures
has been also reviewed.
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2.0 LITERATURE REVIEW
2.1 INTRODUCTION
In this chapter of the research project, the research works of the well-known
researchers from all across the world has been analyzed and the outcomes of their
research studies have been discussed effectively. The major aim of this research study
is to critically analyze the role of outsourcing in global economy. There are several
researchers in the world who have carried out different types of research methodologies
to disparagingly and censoriously assess the importance and significance of
outsourcing at the global level. The section of literature review here also depicts the
identified gaps within the research and the findings of authors that fulfill the gaps of this
research study.
2.2 OUTSOURCING AND ITS ROLE IN GLOBAL ECONOMY
According to (Klare, et al. 2017), today is the world of outsourcing and many of the top
multinational organizations in this contemporary world exploit the procedure of
outsourcing in order to achieve their organizational goals and objectives. In support to
this, (Morschett, et al. 2015) states that the need of outsourcing within the associations
of the several nations have been enhanced drastically, and it has now became a
contemporary trend in the international market. Ranging from research and
development to marketing, distribution and sale to after-sales services, from designing
of products to its assembly, the firms in this modern international market carries out
subcontracting of an ever expanding set of different activities (Milberg, et al. 2013).
Due to the adaptation of the concept of outsourcing within the business, several
multinational organizations of the world have become virtual manufacturers and started
creating their own designs for an assortment of different product range (Upadhya, et al.
2012). According to the annual report of World trade Organization (1998), there are
many organizations in the United States that carries out the process of outsourcing at a
high level. For example; the production of an automobile in America is outsourced in
various different nations in such a way that; 18% of the car’s value is outsourced to
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Japan for the advanced technology and components, 4% to Singapore and Taiwan for
production of minor parts of the vehicle, 7% to the Germany for the designing of car,
approximately around 1.5% to Barbados and Ireland for the processing of data, and
about 2.5% to the United Kingdom for the marketing services and advertisement of the
products. From this statistical data it can be analyzed that only about 37% of the
production value is only generated within the United States of America (Sassen, 2014).
There is an assortment of different reasons and motivations for the organizations to
carry out the procedure of outsourcing within their workplace. Out of those reasons and
motivations, the major reason of motivation for several organizations to do outsourcing
is financial savings from lower international rates (Haufler, 2013).
Figure: 1. Reasons for Outsourcing
[Source: Locke, et al. 2013]
According to (Helpman, et al. 2010), during the process of outsourcing, two or more
than two associations get involve into a contractual agreement regarding the expertise,
exchange of services, and payments for the processing. In addition to this, (Sassen,
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2013) stated that because of the concept of outsourcing, several multinational
organizations of the international market performs well in a variety of different aspects
such as; fuel innovation, core competencies of the business, shortage of skills, etc.
There are many more similar concepts like outsourcing such as; crowdsourcing, near-
shoring, offshore outsourcing, multi-sourcing, etc. that are used by the organizations
from all across the world to enhance the level of profitability of their respective
businesses in the international market.
The global economy gets influenced too due to this outsourcing of the businesses
(Locke, et al. 2013). The concept of outsourcing came into action in the early 21 st
century and since then it has been drastically enhanced at the global level. An
assortment of different benefits is associated with the concept of outsourcing as it
enables the companies to pay for the business functions and services, offers the
organizations with greater control and budget flexibility, the needs and requirements of
specialized staff gets reduced, operation capital of the workplace gets reduced,
operating expenses and risks gets minimized, and it also brings in fresh engineering
expertise (Gereffi, et al. 2012). With respect to the global economy, in the last couple of
years it has been noted that the outsourcing at an international level possess both
positive as well as negative influence on the different economic factors worldwide.
According to (Contractor, et al. 2010), these different economic factors which get
influenced due to outsourcing include; rate of inflation, currency exchange rates, GDP of
a nation, import and export costs of the resources, etc.
In the late 1990s, the legendary management consultant “Peter Drucker” has proposed
a tagline that has become the first coined and developed internationally recognized
business tagline in the international market (Drucker, 2014). This business tagline was
“Do whatever you can do best and outsource the rest”. According to Drucker’s
business tagline, the concept of outsourcing allows the organization to internally carry
out all the operations and business activities in which the company excels, and leave
rest of the operations to be done through outsourcing. From the perspective of the
author it can also analyzed that an organization should only seek to outsource its
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business activities to only those areas that could not demonstrate any type of special
ability, and also the associations must utilize the different advantages of knowledge
provided by the specialist providers of the international market (Farndale, et al. 2010). In
support to this, (Lambin, et al. 2011) added that the major reason behind the
outsourcing of resources and business activities by several organizations in the market
is to reduce the costs of the business such as; non-core business costs, peripheral
costs, production costs, operation costs, labour costs, high energy costs, and high
taxes. The authors in their literature have also depicted that, because of the mandated
benefits such as; safety protection, social security, etc. the companies of United States
may get greater incentive to outsource.
2.3 GLOBAL TRENDS IN OUTSOURCING
There is an assortment of subsets and trends in global business sphere of outsourcing
that have been identified by the researchers from all across the world (Kang, et al.
2012). Along with the trends and subsets of outsourcing, the problems surrounding the
concept of outsourcing have been also determined by connecting the professional and
academic opinions. Regardless of the size and location, outsourcing is extremely vital
for every business in this contemporary world. According to (Barrientos, 2010), one of
the strategic goals of almost every multinational organization is to do outsourcing as a
part of their business activity. The author of this literature study further added that the
importance of outsourcing is not only limited to the organizations but also have
significant importance to the citizens of a nation in which the concept of outsourcing is
utilized by the companies. There are several different factors that may hinder the
modern economic practices of outsourcing, as the government of a nation looks towards
the increment of its own prosperity (Gereffi, et al. 2013).
According to (Oshri, et al. 2015), the latest trends in the concept of outsourcing are not
limited to the standardization of intermediate goods and the purchasing of raw
materials, as it has now been extended to the building up of bilateral relationship with
other multinational firms to commence relationship-specific investments in order to
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satisfy the particular needs of a firm regarding the production and development of goods
or services.
Figure: 2. Outsourcing Market
[Source: Oshri, et al. 2015]
From the findings of the authors in their literature study, it can be analyzed that the
trends in outsourcing at a global level has been changed continuously since the last few
years. From the above depicted statistical figure, it can be observed that the
outsourcing market in the categories like business process outsourcing and information
technology outsourcing has been enhanced drastically over the years since 2000 to
2013 (Oshri, et al. 2015). In addition to this, (Escaith, et al. 2010) stated that there are
several terms and conditions that are to be taken care off while making an outsourcing
contract between the two firms as ignorance of these terms and conditions during the
outsourcing might result in a very heavy loss for a firm or for both the firms in contract
with one another. Out of all the industries that are present in the international market,
the industries that have experienced rapid expansion in the international specialization
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due to outsourcing include; footwear industry, textile industry, electrical equipment
industry, transportation and logistics industry, apparel industry, etc. (Barrientos, et al.
2011). In the past few years, there have been several incidents that took place within
the global economy due to the outsourcing of different business activities among the
multinational firms in the international market. For examples; manufacturing of a drug
known as Heparin was outsourced to a Chinese company, and it has led to the death of
over twenty individuals. Another example for this is the increment of high profile thefts in
the company known as Digital River, Inc. from New Delhi, India. The increment of these
high profile thefts due to outsourcing has thus raised several questions about the
security of data within the firm (Hausman, et al. 2014).
A lot of research studies that have been carried out by the researchers from all around
all across the globe have stated that there is an assortment of different factors which
portrays the facts that the nations like India are no longer preferred as the outsourcing
destinations (Low, 2013). According to (Gereffi, et al. 2013), the researchers have also
identified the driving forces behind the changing trends in the concept of outsourcing
and the motivation behind the researchers to determine the future trends in the
outsourcing between different multinational organizations at a global level.
2.4 POSITIVE ROLE AND IMPACTS OF OUTSOURCING IN GLOBAL
ECONOMY
In this modern world of heavy competition, one of the latest buzzwords in the local as
well as in the international market is the ‘outsourcing’. From the analysis of the statistics
of last 3-5 years at a global level, it can be analyzed that the organizations from all
around the world is looking forwards towards the countries such as India for the
outsourcing of an assortment of different non-core business activities of the
organizations (Bertrand, et al. 2013). The organizations that are seeking for the
development of outsourcing contracts with the nations like India are all quality and cost
conscious. According to (Grimpe, et al. 2010), there is a wide range of benefits
associated with the outsourcing. The primary and most important benefit of outsourcing
with respect to the global economy is the cost advantages that a firm gets from it. In
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addition to this, (Hsiao, et al. 2010) stated that due to the outsourcing of business
activities, the organizations can get their job done at a relatively lower cost and might
get better quality than the one they could have achieved if the same activities have
taken place within their workplace itself. It can be observed that the cost required to get
a work done in India is just a fraction of what is required in western countries and Asia.
Thus, in order to get better quality work at comparatively lower costs, the organizations
from the western countries opts to do outsourcing in the nations such as India. The
organizations that do outsourcing to India, saves up to 60% of their costs in their
businesses (Bertrand, 2011).
Figure: 3. Benefits of Outsourcing
[Source: Bertrand, 2011]
According to (Ali, et al. 2012), in the concept of outsourcing, low cost does not mean
low quality at all. The organizations that do outsourcing thus aims to attain better quality
work at relatively lower costs. Other than the cost advantages, the another benefits of
outsourcing with respect to its positive impacts on global economy include;
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enhancement of efficiency, increment in the focus on core areas, assessing of skilled
resources, advantages of time zone scheduling, attainment of better and fast services,
savings on technology and infrastructure, etc. (Handley, et al. 2013). With a fairly
negative connotation, outsourcing is used as a word at some places. Rather than lying
up the funds of an organization that can be done anywhere else through outsourcing at
effective costs and through easy methodologies, the organizations can now easily frees
up their valuable time and space to concentrate majorly on the core business activities
of the company (Görg, et al. 2011).
In support to this, (Blind, et al. 2010) added that there is a wide range of multinational
organizations present in the market that carries out the process of outsourcing at a high
level. Out of all these multinational organizations in the international market, some of
the leading organizations that carry out the outsourcing procedure at an extremely high
pace include; ISS, Capegemini, Computer Sciences Corporation, Sodexo, Affiliated
Computer Services, Accenture, Wipro Technologies, IBM, etc. (Juga, et al. 2010). Out
of all these cosmopolitan organizations, Accenture is the leading one that carries out
outsourcing procedure at a very high pace and level. It is the top outsourcing
organization in all across the globe and its headquarters are situated in Ireland. The net
revenue sailed by the Accenture in the year 2010 was around $21.55 billion. The offices
of Accenture are situated in around 54 nations of the world. Accenture is highly active in
sponsorship of the several tournaments such as WGC golf tournament, etc. One of the
most significant reasons behind the outsourcing by Accenture is the faster and better
services achieved to the organization due to the outsourcing of an assortment of
different business activities (Leeman, et al. 2012). Consequently, these are some of the
major positive impacts of outsourcing with respect to the global economy.
2.5 NEGATIVE ROLE AND IMPACTS OF OUTSOURCING IN GLOBAL
ECONOMY
Along with the positive role and impacts, there is an assortment of negative roles and
impacts of outsourcing too with respect to the global economy. The major negative
impacts of outsourcing by the multinational organizations in the international market are
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the loss of confidentiality as well as risk of losing the important and sensitive data of the
firm (Leeman, et al. 2012). According to (Gopal, et al. 2010), in the nations like United
States, the concept of outsourcing is negatively affecting the businesses. These
negative impacts on the businesses include; loss of income, enhancement in
unemployment rate, decrement in the competitive advantages of the company, etc. In
addition to this, (Handley, 2012) stated that if an organization fails to have appropriate
control over the functions and management of the business, then the organization’s
control over the outsourcing activities can also loose.
According to the several researchers from all across the globe, in the last 35 years, the
business positions and revenue generation of several multinational firms have been
reduced drastically due to the over exploitation of outsourcing within the firms. The
researchers believe that the nations like India and China should majorly focus on the
manufacturing businesses, whereas the countries like United States must focus only on
the fields of research and innovation (Bustinza, et al. 2010). Along with this there are
several other disadvantages too of the outsourcing with respect to the impacts on global
economy. According to (Steven, et al. 2014), another disadvantage or negative impact
of outsourcing is that the organizations or the providers that carry out the outsourcing
procedure do not give their entire attention and time to the firms for which they do
outsourcing. In addition to this, (Mani, et al. 2010) depicted that if the terms and
conditions of outsourcing do not get clearly defined among the organizations, then it
may lead to the rise of hidden costs and legal problems.
The researchers from several different nations of the world have analyzed that the
aspects of employment has been greatly affected in several nations due to the
implementation of outsourcing concept. According to (Hsiao, et al. 2010), in the nations
like United States and Australia, the organizations hire skilled labors from the foreign
countries and pays them comparatively lower wages. Consequently, this has enhanced
the rate of unemployment in the nation itself and several skilled as well as semi-skilled
people of the United States remained jobless because of the outsourcing. According to
(Lee, et al. 2011), along with the enhancement in the level of unemployment within the
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different nations of the world, the level of poverty has been also enhanced within the
nations such as United States due to the outsourcing. Since the period of Great
Depression in the late 1930’s, the United States have not experienced such levels of
poverty within the nation, but due to outsourcing the United States have faced poverty
more than that period of time (Grimpe, et al. 2010). Consequently, it can be evaluated
that the over utilization of outsourcing in the businesses may lead to the cause of
several negative impacts on the nation as well as on the global economy.
2.6 CONCLUSION
From this section of the research study, it can be concluded that the concept of
outsourcing has a wide range of aspects that could be both negative as well as positive.
There are several multinational organizations in the world that carries out the process of
outsourcing in the international market with the purpose of attaining diverse benefits.
The utilization of outsourcing by an organization has both positive as well as negative
impacts due to several potential reasons as discussed in this abovementioned section.
The global economy too is influenced by the concept of outsourcing in both positive as
well as negative aspects and consequently it leads to the several different kinds of
issues at the international level such as enhancement in poverty, increment in local
unemployment, etc. It can also be concluded from this section of the research study that
the nations like; India, China, America, Japan, and Australia are the mostly influenced
nations all across the globe.
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3.0 RESEARCH METHODOLOGY
3.1 INTRODUCTION
There are different sources to gain information which is used for data collection these
methods are termed as research methods. These may vary from qualitative data to
quantitative data. To collect the data different methods may be applied that includes
theoretical approach, experimental studies or numerical schemes. These methods are
used to arrive at conclusion and solution for the defined research problem (Oshri, et al.
2015).
Research onion
It is the scientific research approach that depicts some stages of research that must be
followed. In these stages the philosophies approach the choice of strategy, time
horizons and the procedures of data collection are studied. The philosophies include
ontology, epistemology and axiology. From these approaches in this research on
devising the role of the Outsourcing on the economy with global context epistemology
approach will be selected to reach an effective conclusion (Malik and Lan, 2016).
Figure: 4. Onion model of research
[Source: Saunders et al, 2012]
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The research onion method has six layers which differ in choices at each level which
depends on data collection and data analysis means. The first layer of research onion
model covers the positivism, realism, interpretivism and pragmatism. Next layer covers
the approaches such as deductive and the inductive approaches that are influenced by
the decisions at first stage. According to an inductive approach, the theory is created
after observation and description whereas deductive theory aims to work opposite and
questions are set first and then the research is started to get answers to these
questions. In the research on the role of outsourcing in the global economy the inductive
research will be carried out. Then in the third layer, the grounds of philosophies are
present that can be chosen by collecting data by the researchers.
The choices of these presented include action research, surveys, case study, grounded
theory, ethnography, experiments and so on (Wuyts, et al. 2015). Then in the fourth
layer, the research methods choices are rendered that includes the qualitative and
quantitative methods which can be used either in combination or individually.
Quantitative research is that method that involves measurement and the quantity. But
qualitative method involves the data that is rich in descriptions, attitudes and the
opinions. In the fifth layer of the research onion, the focus is laid on the research design
that includes the analysis and the data collection and then drives towards the method
chosen and results from the research (Bryman and Bell, 2015).
Honeycomb model
In this model of research methodology the six elements are laid out of which three
elements are combined to form a honeycomb structure as depicted below:
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Figure: 5. Honey Comb model
[Source: Bryman and Bell, 2015]
These six elements in this model cover the research approaches, strategy, design, data
collection, data analysis techniques and research philosophy. These all together form
research methodology and are followed (Saunders, et al. 2015). In this research, onion
model will be followed as this is best suitable for the research type that is carried out.
3.2 RESEARCH PHILOSOPHY
According to the assumptions of nature and the knowledge sources, the research
philosophy is aligned with them and is the studies that are based on some assumptions.
Research philosophy is the beliefs and assumptions that are related to the ways how
data will be collected and will be analysed. Ontology and epistemology are the ways
through which the research philosophy is viewed and the study of research can be
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carried out. The ontology is the one that studies the beings and deals with nature. It
interprets the individual related to a fact. The epistemology is the one that deals with the
sources of knowledge and is focused on truth (Stage and Manning, 2015).
There are two main types of approaches but for in this research, the Epistemology will
be considered that will deal about the possibilities and the nature of the sources
together with the limitations of the knowledge gained from this field. It always revolves
around what is known to be true. In a research the sources of knowledge are
categorised as under:
Intuitive knowledge
Under this, the human feelings are considered and these also involve the faith, intuitions
and beliefs of human which is then compared with the reliance of the facts (McMillan
and Schumacher, 2014).
Authoritarian knowledge
Under this, the information is relied on from the books, supreme powers, experts and
the research papers and many more.
Logical knowledge
In this, the information is gained from the logical reasoning and application of rational
thoughts.
Empirical knowledge
Under this, the information relies upon the established facts that have been
demonstrated.
These above sources of knowledge may be integrated into the research process. In our
above literature review knowledge gained is from the authoritative knowledge and for
the research process, the same will be carried forward. There are different philosophies
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under this which include positivism, pragmatism, realism and interpretivism (Creswell
and Creswell, 2017).
Epistemology has few branches in research methodology which includes historical
perspective, essentialism, perennialsm, empiricism, idealism, progressivism, empiricism
and many more. In the epistemology of this research, the research method employed
will be based on the details of the situations and subjective meanings so the research
method Interpretivism will be selected. In this research, the interpretivism method will be
used so as to determine the role of the outsourcing in the global context (Taylor, et al.
2015).
3.3 RESEARCH APPROACHES
Research approaches that will be employed to derive the role of the outsourcing in
global context there are mainly two approaches which can be selected based on choice.
One is inductive and other is a deductive approach. In an inductive approach, specific
research questions are answered and in deductive research approach, the research
objectives are aimed to achieve through hypothesis testing. This choice is based on the
research problem and the philosophy and other factors. In this research to derive the
role of the outsourcing in the global context, the inductive approach will be undertaken
so as to derive the appropriate role of the same. The other research approaches can be
illustrated as under which includes the logical and theoretical approaches and the
quantitative which includes experimental approaches that involve the hypothesis and
experiments. Another approach is the qualitative one that includes observation through
empirical studies and other is the participatory one that is an empirical study based
(Kelly, et al. 2014).
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Figure: 6. four alternative research approaches
[Source: Kelly, et al. 2014]
3.4 RESEARCH DESIGN
A research design is referred to the strategy that will be employed in order to integrate
the various components of the study that too in a logical manner. So the effective
solution to the research problem will be ensured through effective collection and
analysis of the data. This will help to define the research problem and take important
decisions concerning an inquiry related to the topic as to what, when, where, by what
means and other related questions (Simonsohn, et al. 2017).
Research design normally falls under exploratory and conclusive research design which
will help to explore the research problem. In order to draw out the final evidence and
conclusion, the research design that will be selected is the exploratory research
whereas in order to seek the final answer to research problem conclusive research will
be chosen. The conclusive research design is further divided into two that is causal
research design and the conclusive research design. For this research to identify the
role of the outsourcing in global scenario causal research design is selected that will
explain the cause and effect relationships. This research design will arrange all required
conditions that will help to fulfill relevant requirements to carry out this research. For this
22

research, a survey will be conducted from the literature review that will evaluate the
further research (Alavi, et al. 2018).
3.5 RESEARCH METHODS
There are different methods of research but in this research, the secondary method will
be used that will help to collect the data and the conduct critical evaluation. Through the
information collected from the secondary data sources the role of the outsourcing will be
analyzed and then the interpretation will be carried out by drawing out conclusions at
the end. Through the secondary information, some additions can be made through the
perception of researcher related to the topic and then the critical evaluation is
conducted (Choy, 2014).
A time frame is laid out that decides the event in which the research will complete and
then the validity is checked out against the time frame. The reliability of the research
refers to the extent of the truthfulness that may vary from time to time. Some results in
the secondary research may have less validity as the findings laid are for the specific
time period. The degree of accuracy of the research lays out the reliability of the
research which may also vary in case of secondary research. The soundness of the
research is also dependent on the validity of the research as the factuality is always
valid as it is always reviewed many times by the peers and other researchers but there
arises the issue of validity as the results drawn out has a limited validity for its findings
laid out. So there arises a constraint that limits the trust factor on the basis of the validity
concerns in the secondary data method (Alavi, et al. 2018).
3.6 DATA COLLECTION METHODS
There are mainly two different ways to data collection methods that are primary and
secondary methods. In the primary method of data collection the data is collected for a
specific purpose and a critical evaluation is carried out in order to derive the answer to
the research questions whereas secondary data collection methods are those that
involve the data collection through the previously published articles, journals, research
23

papers, newspapers, books, online portals and magazines and other sources
(Panneerselvam, 2014).
In this research on analyzing the role of the outsourcing in the global context, the
secondary data collection method is used which mitigate the need for the primary
sources. These data will be readily available in order to trace the role of outsourcing and
will scrutinise the internal as well as external sources of organisation. The internal
sources that are available include the sales report, company information. Reports and
management information systems while the eternal sources of data collection include
the government censuses and information, business journals, business magazines,
libraries articles and books, social books and internet. In this research, the external
sources of secondary data collection will be used that will help in better analyzing the
role of the outsourcing the economy with a global context.
The secondary research may be of two types namely qualitative and quantitative data.
In the qualitative data collection method, the data is obtained from the transcript,
interviews, newspapers and diaries whereas in the quantitative data the survey and
financial statements and statistics are reviewed. For this research, the qualitative data
collection will be used. These data may be available in the form of published and
unpublished form that will render the important information (Gast and Ledford, 2014).
The advantages and benefits attached with the secondary data collection method
include the reliability and the time-saving concerns as these data are reliable as they
are reviewed by the peer and also render relevant information within a time frame. It
saves much time and cost of data collection and fulfills the needs of a researcher by
guiding him towards the conclusion with the authentic result.
3.7 MEASUREMENT ISSUES
In order to effectively measure the data, the data must be evident on the basis of
objectivity, validity and reliability.
24

Objectivity is the extent to which the researcher should remain distanced so that the
findings must depend on the nature of study except for the study that is based on the
beliefs, personality and the values (Silverman, 2016).
Reliability is the extent of consistency that reflects the true index of the ability of short
period of time. It is that degree that deals with the consistency of the results when the
same test is repeated over time by the group of people.
Validity is that measure that derives correct interpretation and it is that indication that
shows the soundness of the research and represents the phenomenon that claims solid
claims.
Some other measurement issues apart from the above include economy of measures,
an experience of the tester, the characteristics of participants, and preparation of
participants and ease of administration (Taylor, et al. 2015).
3.8 BENEFITS AND LIMITATIONS OF SECONDARY DATA RESEARCH
The secondary data collected is the data that is collected by the user other than the
researcher. It is the sources of data that was originally collected for the research
purpose by another person.
Some of the benefits that the secondary data collection method will render are as under:
 It saves time
 It proves economical as it saves time and efforts
 It cuts the cost of primary data collection (Flick, 2015)
 It develops a wide understanding of the problems
 It helps in comparison of the data as collected by the researcher
Some limitations of the secondary data research include:
 There is a limitation in terms of accuracy
 The data received may be outdated and do not fit with the research problem
25

 The data may not be sufficient to draw out the conclusion for the research
problem (Flick, 2015)
 There is lack of authenticity
The secondary data has an advantage of the time and cost that is saved due to the
elimination of the primary research and the data collected by the governments and other
institutes always render extensive data that will cover up all the issues so the filtering of
data becomes easy. The secondary data also assumes many parameters which deviate
the results and findings and the data gathered thus becomes inaccurate sometimes. As
the information gathered is second hand so the reliability is violated and the risk
increases of such data collection and reliability.
There also arise some time lag issues that sometimes fail to sync with the times as the
changes are dynamic. In this research, the trends of global context keep on changing
and thus the correct sync is not possible to gain so the time lag issues may violate the
results accuracy. There is also lack of specifications as the answer is not related to the
specific issues which are undertaken in the research the data gathered may be related
but do not resolve the specific issues. There also arises some limitation of this research
as there are the copyrights issues of the information as without the legal permissions
some information is restricted from access. But on another hand, it is easily accessible
as libraries and mail and online access render easy and open access to information that
offers convenience (Lewis, 2015).
3.9 SAMPLING
In the data selection method, the random sampling method will be utilized that will be
employed while making a selection of the journals and the peer-reviewed articles and
magazines that render us the relevant information about the role of the outsourcing in a
global economy. Through 400 articles, journals and research papers and online data, a
random sample of 200 articles were selected based on the abstract reading. Then after
reading these in detail, the final 50 sources were selected that acted the means for the
information and the secondary data sources. This method is reliable and renders
accurate results in the form of research findings. This also renders greater implications
26

for the overall quality of the study on the role of the outsourcing in the global economy
(Cicourel, 2016).
3.10 ETHICAL CONSIDERATIONS
Every research should be abided by some ethical aspects is carry out the research
effectively. These are the aspects that will help to avoid the misconducts of the research
process and will render free on the grounds of ethical considerations. These are the
basic norms that will help to lay out the acceptable conduct (Smith, 2015). For this
research some ethical consideration that is followed are as under:
 Participants of the research are not subjected to any harm and are prioritized
 The privacy concerns are kept on utmost priority
 The results drawn out are solely for the study purpose will not be used for any
commercial purpose
 Its access will be limited for the academic purpose only
 The confidentiality of the research data will also be ensured (Panneerselvam,
2014.)
 The deception about the aims and objectives set will be avoided
On adhering to the above ethical consideration the secondary data maximizes the value
of the data collection and also minimizes the burden on respondents. The reliability is
ensured of the study findings and there arises better transparency in the research
procedures.
3.11 CONCLUSION
Thus through this section of research methodology, it is quite clear that the
epistemology philosophy is undertaken to draw out the research on the role of
outsourcing in a global context. Inductive approach is employed in order to trace the
role of the outsourcing for the economy at a global level. In this research, the secondary
data is undertaken to reach the conclusions about the research undertaken and draw
out the roles of outsourcing acting as a source of economy for the different nations. In
27

the research the qualitative data is focused on as the ideas, findings and drawings of
the previous researchers have been undertaken. In the above research, the data is
collected via random sampling through the selection from the available and relevant
literature reviews from the online articles, journals, academic papers, research papers
and libraries. That has rendered important information about the role that outsourcing
plays in the economy of different nations. The whole research is carried out adhering to
the ethical considerations of the secondary research that drives the success of the
research adhering to the confidentiality and transparency issues.
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4.0 DISCUSSION AND FINDINGS
Since this research study, i.e. the analysis of role of outsourcing in the global economy,
is based on the secondary research, the data that has been collected and exploited are
obtained from the peer reviewed articles, journals, literatures, and books through the
means of secondary data collection method. Initially the 400 literatures and research
studies have been selected regarding the research topic, and out of these literatures
and studies, the 50 most reliable papers have been selected and referred for this
research project. From the analysis of this obtained secondary data, it has been
founded that the role of outsourcing in the global economy is imperative as well as
highly significant (Lacity, et al. 2010). The trends in outsourcing have been continuously
changed and it has led to success and failure of several businesses in the international
market. The latest trend in the outsourcing is due to the continuous growth of
competition among businesses in the international market. There are several different
types of factors because of which an organization carries out the process of outsourcing
within their firm. From the literature review of several peer reviewed articles it has been
observed that the major reason for outsourcing by an outsourcing is the cost
advantages that that is gained by the company.
From the literatures of several well-known researchers from all across the globe, it has
been evaluated that the need of outsourcing within the associations of the several
nations have been enhanced drastically, and it has now became a contemporary trend
in the international market. The countries like America, Japan, Australia, UK, India,
China, etc. are the leading companies that do outsourcing of their internal business
activities in order to gain diverse range of benefits (Chen, et al. 2014). There are several
European nations that attracts other countries of the world towards them for the purpose
of outsourcing, as the concept of outsourcing not only provides benefits to the firm that
is doing outsourcing, but also provides an assortment of benefits to the firm that do
outsourcing for the other companies (Chen, et al. 2014). The leading European nations
that are most attractive countries in terms of outsourcing include; Poland, Bulgaria,
Ukraine, Romania, Latvia, Germany, Turkey, UK, Lithuania, and Czech Republic. All
29

these nations attract businesses from the international market to get their outsourcing
done in these abovementioned countries. From the literature published by (Handley,
2012), it can be analyzed that the rate of outsourcing within the aforementioned
European nations has been enhanced drastically in the last 10 years, and consequently,
outsourcing has improved the economic developments of these nations progressively.
Figure: 7. Leading European Nations With respect To Outsourcing
[Source: Handley, 2012]
The above illustrated graph depicts the findings of author regarding the role of
outsourcing with respect to the European economy (Bharadwaj, 2010). The findings of
this literature study show that Poland is the leading European nation that attracts
several organizations from different parts of the world for the purpose of outsourcing.
Another study on analyzing the role of outsourcing in global economy, which was
proposed by (Haufler, 2013) stated that there is an assortment of different reasons and
30

motivations for the organizations to carry out the procedure of outsourcing within their
workplace. Out of those reasons and motivations, the major reason of motivation for
several organizations to do outsourcing is financial savings from lower international
rates. According to (Wuyts, et al. 2015), there are several nations in the world that
consists of different cities who do outsourcing at a global level. The authors in their
literature study have analyzed the top countries and the number of cities in those
countries that do outsourcing. The analysis of the outcome obtained by the researchers
regarding the topic is portrayed below.
Figure: 8. Countries with Top Outsourcing Cities
[Source: Wuyts, et al. 2015]
From the above illustrated statistical graph it can be evaluated that India and China are
the two nations with maximum number of cities do outsourcing process. The data
depicts that the number of outsourcing cities in India is 14, whereas there are 8 cities in
China that do outsourcing. After India and China, comes the country like Brazil,
Philippines, and Mexico that consists of 6, 6, and 5 cities with them respectively. From
31

the analysis of the data obtained from the study of (Sassen, 2013), it can be depicted
that because of the concept of outsourcing, several multinational organizations of the
international market performs well in a variety of different aspects such as; fuel
innovation, core competencies of the business, shortage of skills, etc. There are many
more similar concepts like outsourcing such as; crowdsourcing, near-shoring, offshore
outsourcing, multi-sourcing, etc. that are used by the organizations from all across the
world to enhance the level of profitability of their respective businesses in the
international market (Bharadwaj, et al. 2010).
Taking all the nations of the world into consideration, it can be assessed that the
rankings of nations on the basis of outsourcing depends on an assortment of different
factors. After analyzing the studies of different authors on the subject, it has been
founded that the top ranking destinations for outsourcing in the world on the basis of
different facets are illustrated below as follows;
Figure: 9. Ranking of Destinations on the Basis of Estimated Jobs in Business
Support Services
[Source: Gennaro, et al. 2016]
32

From the above illustrated figure, it can be analyzed that on the basis of estimated jobs
provided within the nation in the field of outsourcing, Philippines is the leading
destination, and is followed by India, United States, Poland, China, and United
Kingdom. These stats are of the year 2016, and in the year 2015 these stats were in
parentheses.
Figure: 10. Ranking of Destinations on the Basis of Estimated Jobs in Research
and Development Sector
[Source: Hur, et al. 2017]
The abovementioned statistics depict that the rankings of nations on the basis of job
estimation in the research and development sector is in the chronological order; i.e.
India, United States, China, Malaysia, France, Taiwan, and Canada (Bharadwaj, et al.
2010). It can be noted here that the position of India is far better and ahead of the other
nations.
Other than this, the literatures of well-known researchers regarding the analysis of
global trends in outsourcing have been also discussed in the literature review section of
this research report. The authors of different research study have evaluated that, along
33

with the trends and subsets of outsourcing, the problems surrounding the concept of
outsourcing have been also determined by connecting the professional and academic
opinions. The findings of this research studies also depicts that, regardless of the size
and location, outsourcing is extremely vital for every business in this contemporary
world. One of the strategic goals of almost every multinational organization is to do
outsourcing as a part of their business activity. The author of this literature study further
added that the importance of outsourcing is not only limited to the organizations but also
have significant importance to the citizens of a nation in which the concept of
outsourcing is utilized by the companies.
From the findings of the authors in their literature study, it can be analyzed that the
trends in outsourcing at a global level has been changed continuously since the last few
years. It can also be observed that the outsourcing market in the categories like
business process outsourcing and information technology outsourcing has been
enhanced drastically over the years since 2000 to 2017. The trends in the international
market have been drastically and are expected to get change in the same way for the
upcoming couple of decades. The findings of the author regarding the trends of
outsourcing in the global economy also depicts that the importance of outsourcing is not
only limited to the organizations but also have significant importance to the citizens of a
nation in which the concept of outsourcing is utilized by the companies.
There are several different factors that may hinder the modern economic practices of
outsourcing, as the government of a nation looks towards the increment of its own
prosperity. The authors of the literature study regarding the analysis of global trends of
outsourcing deliberated that, out of all the industries that are present in the international
market, the industries that have experienced rapid expansion in the international
specialization due to outsourcing include; footwear industry, textile industry, electrical
equipment industry, transportation and logistics industry, apparel industry, etc.
(Barrientos, et al. 2011). In the past few years, there have been several incidents that
took place within the global economy due to the outsourcing of different business
activities among the multinational firms in the international market. Consequently, it can
34

be analyzed from the findings that the trends of outsourcing in the global economy have
been changed drastically in the last few years and are expected to get change in the
same way.
In this research study, the positive as well as negative impacts of outsourcing with
respect to the global economy have been also analyzed from the secondary data that
were obtained from the reviewing of various peer reviewed literatures. According to the
several studies, there is an assortment of benefits and advantages that are associated
with the utilization of outsourcing concept within the firm (Mani, et al. 2010). The authors
of the different research studies have analyzed that the organizations from all around
the world is looking forwards towards the countries such as India for the outsourcing of
an assortment of different non-core business activities of the organizations. From the
findings, it can also be observed that the organizations that are seeking for the
development of outsourcing contracts with the nations like India are all quality and cost
conscious. According to (Grimpe, et al. 2010), there is a wide range of benefits
associated with the outsourcing. The primary and most important benefit of outsourcing
with respect to the global economy is the cost advantages that a firm gets from it.
Figure: 11. Anticipated HRM Activity
[Source: Green, et al. 2013]
35

From the above depicted graph it can be analyzed that the concept of outsourcing is still
considered as the pertinent topic in the global market. The nations like India, China,
America, Japan, UK, etc. exploits the notion of outsourcing because of the several
benefits that are associated with it. The researchers from the different parts of the world
also deliberated from their findings that the primary and most important benefit of
outsourcing with respect to the global economy is the cost advantages that a firm gets
from it. In addition to this, (Hsiao, et al. 2010) stated that due to the outsourcing of
business activities, the organizations can get their job done at a relatively lower cost
and might get better quality than the one they could have achieved if the same activities
have taken place within their workplace itself. It can be observed that the cost required
to get a work done in India is just a fraction of what is required in western countries and
Asia (Mani, 2010).
The various advantages and benefits of outsourcing has enabled the multinational
organizations from all across the world to carry out this procedure in order to attain
better competitive advantages and gain higher profits for the company. The study of
different researchers depicts that, in order to get better quality work at comparatively
lower costs, the organizations from the western countries opts to do outsourcing in the
nations such as India (Narayanan, et al. 2011). The authors of several research studies
also deliberated that, organizations that do outsourcing to India, saves up to 60% of
their costs in their businesses. It has also been analyzed from the review of diverse
literatures that in the concept of outsourcing, low cost does not mean low quality at all.
The organizations that do outsourcing thus aims to attain better quality work at relatively
lower costs. Other than the cost advantages, the another benefits of outsourcing with
respect to its positive impacts on global economy include; enhancement of efficiency,
increment in the focus on core areas, assessing of skilled resources, advantages of
time zone scheduling, attainment of better and fast services, savings on technology and
infrastructure, etc. (Kuruvilla, et al. 2010).
The authors of different literatures and research studies have analyzed that With a fairly
negative connotation, outsourcing is used as a word at some places. Rather than lying
36

up the funds of an organization that can be done anywhere else through outsourcing at
effective costs and through easy methodologies, the organizations can now easily frees
up their valuable time and space to concentrate majorly on the core business activities
of the company. Thus, these were some of the findings that were obtained from the
literature review section of this research study regarding the positive impacts and role of
outsourcing in the global economy (Smith, et al. 2013).
In this research study, after carrying out the secondary research method, it has been
analyzed that along with the positive impacts, there has been a lot of negative impacts
too of the outsourcing concept with respect to the global economy. The authors of
various research studies have noted that the major negative impacts of outsourcing by
the multinational organizations in the international market are the loss of confidentiality
as well as risk of losing the important and sensitive data of the firm (Leeman, et al.
2012). According to (Gopal, et al. 2010), in the nations like United States, the concept of
outsourcing is negatively affecting the businesses. These negative impacts on the
businesses include; loss of income, enhancement in unemployment rate, decrement in
the competitive advantages of the company, etc.
The researchers from different parts of the world has also analyzed that if an
organization fails to have appropriate control over the functions and management of the
business, then the organization’s control over the outsourcing activities can also loose.
The findings of this research study also portrays that, in the last 35 years, the business
positions and revenue generation of several multinational firms have been reduced
drastically due to the over exploitation of outsourcing within the firms (Hsuan, et al.
2011). The researchers believe that the nations like India and China should majorly
focus on the manufacturing businesses, whereas the countries like United States must
focus only on the fields of research and innovation (Tas, 2014). It has also been
founded by the means of secondary research that, another disadvantage or negative
impact of outsourcing is that the organizations or the providers that carry out the
outsourcing procedure do not give their entire attention and time to the firms for which
they do outsourcing. In addition to this, several research studies have also depicted
37

that, if the terms and conditions of outsourcing do not get clearly defined among the
organizations, then it may lead to the rise of hidden costs and legal problems.
Figure: 12. Negative impacts of Outsourcing
[Source: Kara, 2011]
From the above illustrated figure, it can be analyzed that the enhancement in the rate of
outsourcing has affected several different types of organizations such as; micro-firm,
small organizations, medium and large size organizations (Klimovets, et al. 2015). The
authors of different research studies have founded through their research analysis that
the aspects of employment has been greatly affected in several nations due to the
implementation of outsourcing concept. According to (Hsiao, et al. 2010), in the nations
like United States and Australia, the organizations hire skilled labors from the foreign
countries and pays them comparatively lower wages.
Consequently, this has enhanced the rate of unemployment in the nation itself and
several skilled as well as semi-skilled people of the United States remained jobless
because of the outsourcing. It has also been evaluated from the secondary research
analysis that along with the enhancement in the level of unemployment within the
38

different nations of the world, the level of poverty has been also enhanced within the
nations such as United States due to the outsourcing. Since the period of Great
Depression in the late 1930’s, the United States have not experienced such levels of
poverty within the nation, but due to outsourcing the United States have faced poverty
more than that period of time (Grimpe, et al. 2010). Consequently, it can be evaluated
that the over utilization of outsourcing in the businesses may lead to the cause of
several negative impacts on the nation as well as on the global economy.
Thus, the section of this findings and discussion can be concluded that, there are
several researchers in the world who have carried out different types of research
methodologies to disparagingly and censoriously assess the importance and
significance of outsourcing at the global level. The outcomes of their research studies
have been critically studied and evaluated, and the findings of their research studies
have depicted that the concept of outsourcing is extremely wide and thus, the role of
outsourcing is very important as well as significant in the global economy. It has also
been analyzed from this research study that the notion of outsourcing has both positive
as well as negative impacts on the global economy in the international market.
39

5.0 CONCLUSION
The above research that is conducted has extended deep insights about the role of the
outsourcing in the global context. There is a shift in the perception of the people
regarding the outsourcing that occupies a valuable place in the minds of the people.
Outsourcing in the context of a global economy has helped in saving time and cost for
the companies and business. Outsourcing has extended its role in laying the emphasis
on the core activities of business and thus saving labour cost and the time. From the
above research, it has been derived that outsourcing plays a vital role in the economic
contribution of the nation. This means help a business and economy of a country to put
to maximum utilization its core resources and facilities such that in this globalized
context the limited resources may be utilized to its full capacity that too in a cost-
effective manner. Outsourcing helps in saving the operational expertise of the labours
and the businesses with a strong pool of talents that meet effectively the specialized
needs of a business and helps in the growth of the economy. It helps to maintain better
relations with other nations too as for outsourcing relationship building is a crucial
aspect as the labour and expertise is outsourced from other nations who are cost-
effective.
Outsourcing plays a vital role in enhancing the daily operations of a business and meets
its performance indicators by getting its resources from outside the nation in better
quality and expertise. The benchmarking and statistics show the areas of improvement
for the business that the outsourcing will be lent and will benefit both the nations
involved in the outsourcing. While outsourcing both the businesses and nations get
benefited as there is the mutual benefit for both those involved in outsourcing. The role
of outsourcing is not just limited to the businesses but also it is important for the citizens
of a country. Outsourcing has the major hand to play in every business irrespective of
its size and sector. There are the wide variety of choices and the permissible that are
catered in front of the outsourcing. Due to information technology advent and fabrication
of work the outsourcing has gained the major role in the country and keep excelling
throughout. Through outsourcing, a business can gain advantages from the expertise
and effectiveness of the resources of other business without giving up much of time and
40

resources. It gives the company more time to focus on its core activities and take
advantage of other’s resources at the same time. This helps in cost saving and core
proficiencies. A company having a diverse portfolio and the designs of a product may
benefit from outsourcing as by diversifying their portfolios the risk is diversified and the
returns are reaped as a result. Through outsourcing, the outsourcer is able to deliver a
satisfactory product to the company that is into outsourcing and renders cost-effective
product be aligning with the quality of work and reducing the risk thereby. The
outsourcing thus helps to reduce the burden and the cost together with diversifying the
risk involved. This also boosts the relationships and helps to earn foreign exchange
returns as well.
Together with the benefits outsourcing also sometimes causes some problems that are
associated with the practice of outsourcing. As there arises sometimes loss of
ownership of the one that decides to outsource and they also sometimes fail to receive
the promised gains. When there arises more reliance on the vendor then there arises
loss of control and the trust and risk issues arise. Through this research, it has been
understood that outsourcing thus proves to be beneficial for some while proves a big
mistake for others when the relationship building fails. Through outsourcing, it has been
discovered that a company can step into manufacturing its products in-house that too at
competitive prices at a global level. Through outsourcing, it has become easy for the
business to focus and spend more on efficient business operations rather on the
activities that are not under their expertise.
The role of outsourcing thus is clearly laid as to a cost-saving move that allows
companies in a global economy to end up saving a huge cost and focus on its limited
resources and the core functions of its business undertaking. It emerges as an
outstanding and attractive exercise that help to render many benefits to the small and
medium sixes enterprises as it helps them in reducing their opportunity costs and
rendering them a competitive advantage by diverting resources into not so critical
business functions. Through the surprising element, it has been gathered that the
research and development activities have been in more focus business areas that
41

outsource as they are more focused on the marketing and the production activities.
Through the development of the information technologies the virtual communication and
the relationship building has become possible.
It has been recommended through the above research that with the growing trends the
business has become agiler and is gaining compatibility with the global economy.
Outsourcing has led to the increase in the foreign direct investment. These types of
outsourcing activities are thus recommended for the largely shared service centres that
usually have lack of cost-effectiveness and the resources that can be redeployed in the
market. Outsourcing thus can be used by the small and medium enterprises globally
that will help them in reducing the overall cost and helps the companies and business in
devising and focusing more on their strategic goals achieving excellence and growth in
a long run in the global economy.
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