Outsourcing, especially combined with offshoring, has come under strong public criticism with the idea it damages the local labor market. In outsourcing, one company transfers the delivery of certain services to the other, which in effect harms the local job market, and individuals. It is a concern outsourcing has harmful effect on the current job market, with great concerns regarding employment security. On the other hand, there is also a strong opinion that outsourcing reduces cost to a great extent, providing large economic benefit to the society. The labor laws in the US is as not as protective as the European countries, where there is a specific law regulating transfer of undertakings, which is termed as “Protection of Employment”. In many cases, the value promised by the outsourcer are not often realized by the client. This becomes the major business criteria against outsourcing.
The responsibility towards shareholders:
The appointed Broad of Directors of a public listed company is responsible for carrying on the effective operations of such an organization on behalf of the shareholders. It is the Board of Directors who takes the decision relating to outsourcing, keeping in mind that the shareholders are interested in return on investments, and/or social obligations. Even with the Board taking strategic decisions on matters of the company, the shareholders reserve the right to state the views for or against the decisions taken, and let the Board know regarding their opinion. In case of outsourcing, the shareholders can make their views known to the Board if they are against that.
The difficulty in languages:
There are obvious difficulties when differences in languages and culture come up in outsourcing a project. This is particularly the case where such projects are outsourced to region where English is not the first language, and the country is culturally different. The quality of the software product affects greatly when the project details are not comprehended by the software team in the offshore company.
Often the words spoken are not understood by the onsite teams. The kind of grammar used, the pronunciations and accents, and different phraseology make it difficult to relate any information that needs to be conveyed. The clues that arise out of face to face meetings are evidently missing, resulting in complete misunderstanding of the entire conversation.
Social responsibility:
Outsourcing, especially offshore, does result in lower paid workers. On the contrary, it is argued that it takes away the benefit of employment from most of the local people.
Outsourcing affects service quality:
The measure of quality produced by the offshore company is usually measured through a service level agreement, SLA in short. This is included in the outsourcing contract. This is an important aspect in any outsourced jobs, and poorly defined SLA, or no inclusion at all, might result in loss of quality output. Even if you have defined SLA, you need to be very particular in its preparation, for it is the only way that you can measure quality of the product produced. SLA puts the real measurement of objective of the outsourcing contract.
There are different views regarding the quality measured. According to the CEO of the organization, the product might be perceived as a lower quality but acceptable to meet the business needs at the right price. The management team might think that the quality has detonated compared to the previous project. As far as the end user is concerned, he might think that the product is well within the SLA, but is still inadequate. As regards the offshore company, they might feel that the product meets every aspect of the SLA, meeting every definition regardless of the perception of others.
Customer satisfaction is the only way that quality of any product could be measured. This is determined through questionnaires especially designed to bring out the customer opinion of the product, which is considered to be an unbiased view.
Offshore company qualifications:
There is every possibility that by outsourcing company is replacing their qualified staff with others who is under-skilled, or having different non-equivalent qualifications.
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