Bits and Pieces – U.S. Labor Cost and Outsourcing

On January 12, 2012, in Outsourcing, by Business Development Group
Trend in outsourcing started with the outsourcing of low-skilled manufacturing labor to lower -cost, developing countries. Now, outsourcing is beginning in high-technology manufacturing and high-end services jobs. U.S corporations can hire highly educated and competent workers elsewhere at a fraction of the cost of a U.S. worker of equivalent talent.

Trend in outsourcing started with the outsourcing of low-skilled manufacturing labor to lower -cost, developing countries. Now, outsourcing is beginning in high-technology manufacturing and high-end services jobs. U.S corporations can hire highly educated and competent workers elsewhere at a fraction of the cost of a U.S. worker of equivalent talent.

The present outsourcing phenomenon has had long-term impact for the U.S.   As businesses took advantage of the low-cost, highly educated workforce in a global human resources,  American strengthened its competitive edge in core functions such as design, engineering, and even research and development. 

The outsourcing trend of moving from  low-skilled manufacturing labor to complex core functions has created  high-technology,  high-end jobs which employs highly educated and competent workers.

Offshoring as well as outsourcing is likely to intensify as new, less expensive collaborative technologies enter the scene and offer an increasing number of developing nations and small businesses an opportunity to participate in the global economy. Although the global economy is pervasive today, still, more than 80 percent of most small businesses still do business only at a local level, within their communities. Normally, only large, multinational corporations take advantage of the benefits the global economy has to offer. However, as information technology processes and legal barriers across borders continues to improve, this will change.

Read related article: Outsourcing Organizational Capability Assessment

 Process

Developing nations are increasing their standard of living and wages. But the cost of labor in those countries is still significantly lower than an equivalent worker in the U.S. This also applies to the highly educated and highly skilled labor in the Philippines, such as someone with a master’s degree and Ph.D. in engineering, math or science.

Read related article: Philippine Outsourcing: What is a BPO Virtual Captive?

 Keystone

Outsourcing happens when companies subcontract work to another establishment instead of hiring employees to do the work. Most outsourcing work is subcontracted to companies overseas in developing nations, such as the Philippines, India and China, primarily because of the lower cost of labor. The overseas outsourcing phenomenon is also referred to as offshoring, and the newest wave is referred to as knowledge process outsourcing (KPO).

Read related article: BPO Real Time Outsourcing Customer Engagement – Giving your Customers More!

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