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IT Outsourcing in the US (Overview (Sources ("Deloitte's 2016…
IT Outsourcing in the US
People's opinions
Statement: Despite having many benefits, outsourcing is still not supported by everyone
According to Pew Research, the majority of Americans feel secure in their jobs today. However, some workers do have a sense of foreboding about several emerging threats. 8 out of 10 Americans say outsourcing hurts American workers with more sales of foreign-made products also high on the threat list ("Outsourcing Viewed As The Top Threat To U.S. Jobs")
Outsourcing has had serious consequences in some states where jobs have been lost to overseas competitors (Understanding Business: The Core)
Pros
Cost reduction
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Junior programmers cost only $20 per hour and only the number is just $40 for senior software engineers >< an average software engineer in the US might charge up to $100 per hour, not to mention the cost for an experienced one could go up to $150 (“What entrepreneur should know about outsourcing to Ukraine”)
“U.S technology workers just can’t compete price-wise”. Due to the lower cost of living, entry-level IT worker in China earns $7,000 per year and the ones in India earn $8,400. Even the IT manager in China make just $22,600 and those in India make as much as $30,800 per year (“How information technology impacts the economy”)
This type of outsourcing where jobs are shifted to primarily low-wage global markets is called offshore outsourcing and it is particularly popular among companies that seek to outsource IT and large US corporations (Nickels 83)
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Trends
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The global information technology outsourcing industry revenue has been very stable within the past decade, peaking in 2014 at 76.1 billion US dollars. Although it has decreased to 62 billion US dollars in 2018 comparing to 67.8 billion US dollars in 2010, it is bound to rise again due to the trends shifting to IT outsourcing (“Global outsourcing industry revenue from 2010 to 2018, by service type (in billion U.S. dollars)*”)
72% of the respondent currently outsourced IT at the time, which is highest of all fields, and 31% would in crease use of outsourcing IT, just behind HR and finance at 32% and 36% respectively. 59% saw outsourcing as a cost-cutting tool, 57% used it to focus on core business, both of which were regarded as crucial benefits above in this paper (“Deloitte’s 2016 Global Outsourcing Survey”)
Overview
Definition
Outsourcing is “the process whereby one firm contracts with other companies, often in other countries, to do some or all of its functions” (Nickels 83)
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Thesis
Although IT outsourcing, or outsourcing in general, is not positively perceived by a certain number of people, its revenue has proved to be stable within the past few years. Its downsides such as data risks and shared protocols were acknowledged but the advantages outweigh its disadvantages. For that reason, it is still widely favored and constantly adopted by firms.
Sources
"Deloitte's 2016 Global Outsourcing Survey." Deloitte, May 2016, www2.deloitte.com/content/dam/Deloitte/nl/Documents/operations/deloitte-nl-s&o-global-outsourcing-survey.pdf.
"Global outsourcing industry revenue from 2010 to 2018, by service type (in billion U.S. dollars)*." Statista.com, www.statista.com/statistics/189800/global-outsourcing-industry-revenue-by-service-type/.
Kimberly, Amadeo. "How Information Technology Outsourcing Impacts the Economy." The Balance, DotDash, 20 June 2018, www.thebalance.com/reducing-it-outsourcing-3306192. Accessed 20 June 2018.
Marco, Nacho De. "5 Things Companies Get Wrong About Global IT Outsourcing." Business, 5 Nov. 2018, www.business.com/articles/5-things-companies-get-wrong-about-global-it-outsourcing/. Accessed 15 Nov. 2018.
McCarthy, Niall. "Outsourcing Viewed As The Top Threat To U.S. Jobs." Statista, 10 Oct. 2016, www.statista.com/chart/6140/outsourcing-viewed-as-the-top-threat-to-us-jobs/.
Rivard, Suzanne, et al. Information Technology Outsourcing. Routledge, 2015. Advances in Management Information Systems 8.
Skoropad, Andriy. "What Entrepreneurs Should Know About Outsourcing to Ukraine." Entrepreneur.com, 14 Sept. 2018, www.entrepreneur.com/article/318845.
Twing, Dan. "The competitive reasons for outsourcing." NetworkWorld, IDG, 18 Oct. 2006, www.networkworld.com/article/2299761/lan-wan/the-competitive-reasons-for-outsourcing.html.
William, Nickels G., and McHugh James. Understanding Business: The Core. PDF ed., McGraw-Hill Higher Education.