The process of globalization has significantly brought the world together into one small global village. Due to globalization, the world can share business, socio-cultural organization and economic structures making communication and telemarketing relatively easy. Comparative advantage rises from the ability to compare costs, production rate and profit which will eventually enable the individual or firm to sell the end product at a lower price thus winning consumers from competitors. At times it is affordable to purchase goods and/ services from a firm with comparative advantage than internally producing them hence firms tend to reduce costs by transferring or purchasing part of work from or to outside suppliers instead of internally completing it-this is outsourcing.
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Globalization has been embraced with great appreciation as the advantages were more visible than its disadvantages, “But the current financial crisis has put globalization on hold, with capital flows reversing and global trade shrinking”-according to International Monetary Fund. Initially, globalization was aimed at emerging an international network of economic and social systems but this has not turned out as planned. Globalization has restructured and imbalanced the structure of the world-bank, therefore, contributing to great economic depressions in the world and increasing rate of unemployment in countries like America due to factors like outsourcing.
Comparative advantage sets to give every country a certain step to rise above the others by realizing what the country can effectively produce for less and abundantly in order to supply it to other countries. However, the term has been greatly mistaken to mean absolute advantage and countries fail to realize the potential within them because they do not recognize the initial aspect-specialization.
According to Samuelson (1969), “Thus, suppose we begin at a preparation point where each country is specializing on the good in which it has a comparative advantage” (p. 393). This means that for any country or firm to successfully carry out the comparative advantage that special trend or quality has to be identified and used.
Outsourcing from the U.S has greatly affected the political systems of developing countries. The governments of developing countries feel the need to sign outsourcing contracts with U.S as a means of developing and improving their countries thereby deciding for the citizens. The citizens may strike feeling that their opportunities are being given away.
For years now, the Indian call centers have been a great success and lead employment for Indians and other European countries. However as recent as 2011, India has great competition from the Philippines, “Over the last several years, a quiet revolution has been reshaping the call center business: the rise of the Philippines… More Filipinos-than Indians now spend their nights talking to mostly American consumers” (para. 1-2). The Indians good grasp and command of the English language has over the years given India a hold over America and other European countries in outsourcing.
Outsourcing has helped strengthen country relationships and subsequently reduce the world’s political borders due to use of internet and mobile phones. Within America, outsourcing is enabling the top rich people to make more money by expanding externally while the average American still works for peanuts. In developing countries, it has provided jobs and helped the countries form alliances with developed countries. Outsourcing has aided and boasted the economic status of these developing countries.
In the near future, outsourcing will seemingly totally bring down borders. Every country seems eager to venture into outsourcing. After all the great advantage (according to Flatworld solutions (20130)) is that there is “Reduced operational and recruitment costs: outsourcing eludes the need to hire individuals in-house”. The firm or country cuts down costs but on the other hand, this can prove disastrous as people lose their jobs.
The future of outsourcing is challenging. The rise of the Philippines and other competitors like China and Vietnam makes the competition even steeper for the reigning outsources the Indians, not to mention the competition internally. However, it is safe to conclude that India has a strategic time location and more companies use Indian software services and the friendly charges propels more outsourcing firms towards India-therefore the future of outsourcing favors and is favored by India.
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