Is outsourcing desirable or undesirable? Well a big debate has been and still is going on across the globe where people are being affected by it. And because of the two views we find protagonists for both. While business enterprises support outsourcing, employee unions and the politicians often oppose the same.

Outsourcing offers many advantages to the home countries business undertakings and also to the country wherefrom the services are being or will be provided. In this cut throat competitive world one of the ways to enjoy sustainable advantage is to enjoy cost leadership. This is possible only when the cost is minimized, and outsourcing to cost efficient country or organization is the best alternative. Most of the auto manufacturing companies buy components from outside and merely assemble them in their own factories, because it minimizes their cost of manufacturing.

Secondly, they get to exercise a greater control over quality. Thirdly, they also have the advantage of deferred payment. Fourthly, there is no need for them to buy raw material, and stock semi-finished products in their warehouses, which also enables them to save on interest payments apart from saving on godown charges and pilferage and wastage. Number of people employed also gets reduced. Lower the number of employees lower the headache of unionism. All these advantages enable the business firms to focus on their core business and customer relationship management. The industries, which resist outsourcing , like US Steel, go down and down.

Outsourcing brings cost savings and increase in profits not only to business firms, but the host country also benefits in macro-economic terms. According to McKinsey Global institute of the full $1.45 to $1,47 of the value created globally from off-shoring $1 of US labor cost, the US alone captures $1.12 to $1.14 of value while receiving countries like India capture on an average just 33 cents.

The other form of outsourcing that is getting the work done by outsiders at your own workplace also contributes a lot to the exchequer of the home country. To illustrate, nearly 170 Indian IT companies employed nearly 60,000 people in the US in 2001. They paid $810 million in taxes and $300 million in social security, and spent $1.2 billion in purchase of goods and services. Because of this immigrant population many other business opportunities were created.

Of the disadvantages of outsourcing, the most important argument is that it results in loss of jobs. The activities which were performed in home countries or organizations are transferred to other locations. The second disadvantage of outsourcing is that the labor rate gets a decline. Third, the trade unionism gets a jolt. Fourth, due to unemployment, the state has to pay allowances by way of unemployment dole. This all creates unrest in the society and the politicians often find their vote bank being annoyed. To the industry, in its persuit to reduce cost , quality may suffer.

A business leader has rightly commented that to be successful in business do not go for cost cutting but cut the wastage. Recently, many westerners have expressed their unhappiness over the pronunciation of Indian call centre agents. There have been incidents of leakage and misuse of vital customer related data at the call centers located in India. To outsource the jobs to other locations technology also needs to be transferred, and it has its own problems.

To conclude, in this world there is nothing conclusive. To go for outsourcing or not a firm or an organization must make a comprehensive cost benefit analysis. One thing is sure that business has no nationality and its concern will always be its own benefit. Gone are the days of patriotism and cultural nationalism.