Contents

• Introduction 3
• Concept of global outsourcing 4
• Theory of global management 4
• Global outsourcing in organizations 4
• Theoretical concepts behind global outsourcing 5
• Transactional Cost theory 5
• Analysis of global outsourcing 6
• Global outsourcing in USA 6
• Types of global outsourcing 8
• Pros of global outsourcing 8
• Economic benefits 8
• Ethical advantages 9
• Cons of global outsourcing 9
• Economic disadvantages of global outsourcing 10
• Political issue on outsourcing 10
• Ethical disadvantages of global outsourcing 10
• Social effects of global outsourcing 11
• Recommendations 11
• Fair globalization 11
• Procurement outsourcing 12
• Conclusion 12
• Bibliography 13

Description

This report is based on the following scenario –
A large number of firms from developed economies outsource various works and operations to emerging / developing countries. However, global outsourcing has become a controversial strategy raising conflicting debates. Proponents of global outsourcing point to the benefits. Some of the key points they mention include the following: The outsourced work provides needed jobs that help decrease poverty in developing countries. By reconfiguring value chains to the most cost-efficient locations, companies in the home country can reduce production costs, allowing them to hire more workers and reduce prices charged to customers, etc.
On the other hand critiques argue that foreign suppliers frequently operate sweatshops, factories where people work long hours for very low wages often in harsh conditions. Some outsourced work is performed using child labour. Many factories have poor environmental standards and generate excessive pollution, etc.
The Minister of Trade and Industry in a developed economy (chose any one of developed economies – e.g. France, Japan, UK, USA, etc.) is considering whether his government should pass a law that would restrict the ability of firms in his country to outsource work to countries that pay lower average wages than his country.
Assume you are an Adviser to the Minster, and he has asked for your advice on this issue. What recommendations would you make to the Minister on whether the country should pass a law that would restrict the ability of firms in the country to outsource?