Tuesday, April 13, 2010

Outsourcing your business:

Outsourcing has become a huge business for the very large corporation. They can go into virtually any country and give their back office operations to them and can reduce the amount of expenses by a fraction of what they are doing in the United States. It is true that some work cannot be outsourced (like plumbing, carpenting, electrician etc) but financial services and computer companies have outsourced hundreds of thousands of jobs since this craze begin.

How can you compete with people in less developed countries when all the U.S. based companies have to do is to pay a lump sum agreed amount to the company involved in the outsourcing and that’s it? No hassle of social security tax, unemployment insurance, health insurance, payroll tax and retirement sharing plans etc. Also they don’t have to deal with labor laws (which are very lax in other developing countries). If you have seen clothes in departmental stores, they are rarely made in the United States and they are still expensive, why is that? Are we paying for the label of the clothes which are made in very less developed countries at a fraction of the costs?

Same is the case with software and computer work. Any company can hire a software developer or programmer in India for a fraction of what they have to pay her and still get the same quality of work. Can there be any way out of this. We have been told that the outsourced work is not going to come back and that seems to be true unless the same labor laws and same taxes are applied in the outsourced countries.

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