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Hr Research Paper

3178 words - 13 pages


Outsourcing is said to have emerged a few thousand years ago with the production and sales of food, tools, and other household appliances. As soon as small communities and societies began to form, people with specialized professions began to trade with each other for goods and services. It can be said that each worker was outsourcing some activities to others. Research shows that even in the industrial age, a few thousand years later, very few companies outsourced any of their operations. Companies in the 1800s and 1900s were vertically integrated organizations, taking care of their own production, mining, and manufacturing from raw materials to finished goods ...view middle of the document...

To fully understand and debate such a topic, one must understand the critical factors of outsourcing, which are its background, social, ethical, and economic effects.
According to, outsourcing first refers in Adam Smith’s The Wealth of Nations in 1776 as a method to cut down cost by hiring cheaper labor in less developed countries. It is not until the 1970’s that companies began to outsource their business offshore, to third world countries in particular, India and China. The booming growth and development of IT (information technology) and .com companies find it easy than ever to do business abroad. Gartner Inc. shows that the amount of global revenues reached up to $298.5 billion in 2003. ( Marc Ferranti states, the trend of outsourcing continues to grow stronger, as more opportunities become available for businesses. Innovation of new technology, lower cost of production, and experienced managerial outsourcing are some of the large factors that have contributed to the growth of outsourcing. “There are currently about 1 million IT and BPO (business process outsourcing) jobs being fulfilled on an offshore basis, but that could increase to 6 million or 8 million over the next 10 years, said Allen Weinberg, principal and North American leader of McKinsey & Co.'s offshoring practice.” ( While knowing the establishment of outsourcing, it is also important to understand the meaning of the term.
There are different definitions for outsourcing in focus to different purposes and fields of industry, but the general definition of outsourcing would be the transferring of jobs or services to a third party. The term outsourcing is usually mistaken with offshoring. Indeed offshoring is a part of outsourcing, in which companies transfer their jobs to foreign companies, instead of domestic companies ( Probably the largest portion of offshore outsourcing can be attributed to the technology world. Outsourcing in the technology world is divided into two types, technology services outsourcing, and business process outsourcing. As the term itself indicates, technology service outsourcing mainly deals with computers or electronic infrastructure of the company. It’s purpose, is to provide companies with effective computer support and niche software systems, to respond to the demand of today’s world. Technology service outsourcing includes simple tasks such as website development to accommodate services such as electronic commerce. While technology service outsourcing could be seen as an intangible aspect of a company, business process outsourcing, deals with the actual infrastructure of the company. Tasks such as customer service, to human resource, and security are all parts of business processing outsourcing ( Even though it is important to understand the core of outsourcing, it is even more important to understand its global effects.

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