Tuesday, July 20, 2010

CONCERNS – LEGAL OFFSHORING TO INDIA.

The advent of legal off-shoring came out of the crying need to cut costs. We understand the reasons of various giant in electronics, automobile & other sectors opening their industries across the border with motive to transfer the technology for developing the products at cheaper rates. Many big brands of the world had opened their units in countries like China, India with the sole motive to produce the units at lower cost. One does not understand as to why concerns were not raised for those, off-shoring of huge industries out of their countries.

Let me examine it from the view point of consumer living in developed country. Mr. ‘X’ living in a developed country wants to purchase an article. He gets two options i.e. pay ‘A1’ for the said article being produced & sold in his country or pay ‘A2’ for the same article but being produced in other country & sold in his country. The different questions arising in his mind for choosing one of them can be put like this.

A. What is the difference between A1 & A2?
B. Is there any quality variation between the articles produced in different countries?

Mr. ‘X’ would prefer buying the article in which he pays less and gets the quality product. As I understand Mr. ‘X’ would buy article by paying ‘A2’ as the cost would be quite less. I am sure Mr. ‘X’ did not think of the loss of job in his country if he buys the article produced in other country. No eyebrows were raised for the export of goods produced by developing countries to developed countries.

But incase of export of services by developing countries to developed countries the logics become different. However, we still think of loss of jobs while talking about offshore industry. The concerns raised for outsourcing of services get a national touch when we try to understand and justify the outsourcing. The real concerns like quality, confidentiality are dominated by the issue of Nationalism. The decisive factors determining the issue of off-shoring/ outsourcing are:

a) The need of outsourcing which in turn is influenced by following things:
i. Cost effectiveness
ii. Non-availability of resources
iii. Time Zone Benefits

b) The availability of provider /people to give services depending on the following:

i. Being compatible in providing the services
ii. Availability of resources
iii. Capable of delivering quality services
iv. Breaking the language & accent barriers

The Push & Pull factors match up to determine and resolve the concerns of this infant outsourcing/off-shoring industry.
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