Sourcing offers an opportunity to cut costs by leveraging lower costs abroad, besides getting the benefit of a 24-hour job cycle by sourcing out to countries in different time zones such as India and China. It is critical carefully to consider the nature of tasks that can be sourced out profitably without affecting quality and functionality. It is also necessary to consider the potentially adverse effect of the decision on employees’ morale as well as the costs of establishing/maintaining smooth operations with outside companies. Further cultural factors that could affect cooperation, security, compliance and integrity must be borne into consideration. Tasks that require sensitive information or those that are sensitive to a firm’s operations/products should not be sourced out without absolute and verifiable trust that outsourcing partners can handle it as expected.
According to Overby (2014), robot-like technologies would automate many functions that are presently performed by humans. Developments in artificial intelligence and other technological improvements, these robots, could spell the end of outsourcing to other countries based on labour costs alone (labour arbitrage). The rise of smart machines finally promises to give industrialized countries an edge over low labour costs countries such as China, Vietnam and India. It will shift the focus towards capital and human capital investment as the basis of efficiency and competitiveness. In addition, smart machines are likely to displace people in manufacturing and logistics while at once changing the outlook of different industries. Increased automation has inevitable efficiency gains to firms, which is they must be ready to adopt it. However, the displacement of labour implies that workers, learning institutions and policy makers need to focus their efforts towards acquiring skills that cannot be replaced by machines, if capital-intensive production must be beneficial on the overall.
Holtsnider, B., & Jaffe, B. (2012). IT Manager's Handbook: Getting Your New Job Done. New york: Morgan Kaufmann.
Overby, S. (2014, Jan 17). 10 IT Outsourcing Trends to Watch in 2014. Retrieved Nov 6, 2014, from http://www.cio.com/article/2378979/outsourcing/10-it-outsourcing-trends-to-watch-in-2014.html