Outsourcing to a Foreign Country
Outsourcing can be defined as obtaining goods or services from an outside supplier or contracted work instead of getting it done within one's own company. Outsourcing has been a very popular economic decision over the last few years. Businesses are doing this to stay competitive and to become more efficient in this uncertain economy. In terms of globalization, the outsourcings that will be discussed are sending jobs, services, manufacturing, and even accounting from American businesses to other nations.
Since the recession in 2008, many firms have looked for a competitive advantage in order to keep themselves from going under. These firms have recently turned to outsourcing departments as well as production to other nations in order make their business more proficient. There are multiple reasons why U.S. companies have outsourced to other countries. The obvious reason is to cut costs, but there are more components to it. For one, it allows companies to focus more on their core business. Firms outsource Information Technology overseas to specialized IT service companies and are therefore able to focus on more important core aspects. The tax benefits from outsourcing are another reason; company's escape the world's second highest tax rate and often settle in a country where they get tax incentives for creating jobs. A foreign tax credit is also given to outsourced companies by the U.S.
When companies outsource any part of their business, accounting is affected. Costs are not only reduced, they become restructured. There is a shift from fixed costs to variable costs. These variable costs become easier to predict, this is because most outsourcing vendors offer variable pricing based on the actual sales that are generated.Â
 Many of the aspects of accounting has been globalized, this is happening more and more. When departments are outsourced, almost all aspects of accounting are eliminated. Balance sheets, bookkeeping, and most other statements are eradicated so businesses can focus more on financial analysis. When companies outsource to other countries, they almost completely eliminate the need for accountants as well.
              Stated above, sending jobs to other countries has always been a way to cut costs. The biggest cost reduction from outsourcing is the difference in labor costs. The wage gap between industrialized nations such as the U.S and developing countries like China and Mexico is huge. The low cost of human capital in these developing nations saves a lot of money in overhead. Depending on how large the company is millions could be saved by sending IT overseas.   Not only are salaries cheaper, but these workers tend to have a higher quality of work by producing better services and products.
Cutting these operational costs can create room in the budget for other company uses. When firms save money by outsourcing, they are able to spend more on core phases of the company such as marketing.   Most manufacturing companies who outsource often send 50% of their work overseas. Again, this saves them large sums of money from not incurring large initial capital expenditures as well as not having to pay a minimum wage or benefits to employees.
Outsourcing has drastically affected technology in engineering. Since 2008, hiring hasn't increased so outsourcing has become a mainstay in this industry. The average salary of an engineer in America is four to five times larger than an engineer in India. More and more companies see the cheap labor rates and take advantage.  Engineering companies are aware that cheap labor isn't the only key to being profitable. The quality of engineering design in India is very advanced. The high quality design and cheap labor rates of overseas engineering makes outsourcing in America extremely profitable.
More engineering work has been outsourced in the last 3 years then it ever has. This has led to engineering industries to become very efficient. These firms have been able to outsource old products to keep them from becoming obsolete. By doing this, they have been able to focus on designing newer products in-house, in America. This has had a positive impact on the larger manufacturing companies in the United States; they have now become a foundation of specialized expertise.
Jobs aren't just being outsourced to other countries; a lot of jobs done by humans can now be done by machines. Technology is an excellent candidate for outsourcing, especially in engineering.  It has become more cost efficient to buy cutting edge technology rather than hire a worker who requires a minimum wage and benefits. A lot of companies have also saved money from buying new machines by becoming more ‘green'. Overall, outsourcing has maximized engineering technology in today's economy.
Works Cited
Spiegel, Rob. Outsourced engineering services show solid growth. 7/15/2010, Vol. 55 Issue 13, Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â p51-51, 3/4p
Accounting Outsourcing to Foreign Countries. Â 8/29/2011
Engineering In India. 11/8/2007
Businesses Cut Costs and Boost Efficiency with Outsourcing
Outsourcing can be defined as obtaining goods or services from an outside supplier or contracted work instead of getting it done within one's own company. Outsourcing has been a very popular economic decision over the last few years. Businesses are doing this to stay competitive and to become more efficient in this uncertain economy. In terms of globalization, the outsourcings that will be discussed are sending jobs, services, manufacturing, and even accounting from American businesses to other nations.
Since the recession in 2008, many firms have looked for a competitive advantage in order to keep themselves from going under. These firms have recently turned to outsourcing departments as well as production to other nations in order make their business more proficient. There are multiple reasons why U.S. companies have outsourced to other countries. The obvious reason is to cut costs, but there are more components to it. For one, it allows companies to focus more on their core business. Firms outsource Information Technology overseas to specialized IT service companies and are therefore able to focus on more important core aspects. The tax benefits from outsourcing are another reason; company's escape the world's second highest tax rate and often settle in a country where they get tax incentives for creating jobs. A foreign tax credit is also given to outsourced companies by the U.S.
When companies outsource any part of their business, accounting is affected. Costs are not only reduced, they become restructured. There is a shift from fixed costs to variable costs. These variable costs become easier to predict, this is because most outsourcing vendors offer variable pricing based on the actual sales that are generated.Â
 Many of the aspects of accounting has been globalized, this is happening more and more. When departments are outsourced, almost all aspects of accounting are eliminated. Balance sheets, bookkeeping, and most other statements are eradicated so businesses can focus more on financial analysis. When companies outsource to other countries, they almost completely eliminate the need for accountants as well.
              Stated above, sending jobs to other countries has always been a way to cut costs. The biggest cost reduction from outsourcing is the difference in labor costs. The wage gap between industrialized nations such as the U.S and developing countries like China and Mexico is huge. The low cost of human capital in these developing nations saves a lot of money in overhead. Depending on how large the company is millions could be saved by sending IT overseas.   Not only are salaries cheaper, but these workers tend to have a higher quality of work by producing better services and products.
Cutting these operational costs can create room in the budget for other company uses. When firms save money by outsourcing, they are able to spend more on core phases of the company such as marketing.   Most manufacturing companies who outsource often send 50% of their work overseas. Again, this saves them large sums of money from not incurring large initial capital expenditures as well as not having to pay a minimum wage or benefits to employees.
Outsourcing has drastically affected technology in engineering. Since 2008, hiring hasn't increased so outsourcing has become a mainstay in this industry. The average salary of an engineer in America is four to five times larger than an engineer in India. More and more companies see the cheap labor rates and take advantage.  Engineering companies are aware that cheap labor isn't the only key to being profitable. The quality of engineering design in India is very advanced. The high quality design and cheap labor rates of overseas engineering makes outsourcing in America extremely profitable.
More engineering work has been outsourced in the last 3 years then it ever has. This has led to engineering industries to become very efficient. These firms have been able to outsource old products to keep them from becoming obsolete. By doing this, they have been able to focus on designing newer products in-house, in America. This has had a positive impact on the larger manufacturing companies in the United States; they have now become a foundation of specialized expertise.
Jobs aren't just being outsourced to other countries; a lot of jobs done by humans can now be done by machines. Technology is an excellent candidate for outsourcing, especially in engineering.  It has become more cost efficient to buy cutting edge technology rather than hire a worker who requires a minimum wage and benefits. A lot of companies have also saved money from buying new machines by becoming more ‘green'. Overall, outsourcing has maximized engineering technology in today's economy.
Works Cited
Spiegel, Rob. Outsourced engineering services show solid growth. 7/15/2010, Vol. 55 Issue 13, Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â p51-51, 3/4p
Accounting Outsourcing to Foreign Countries. Â 8/29/2011
Engineering In India. 11/8/2007
Businesses Cut Costs and Boost Efficiency with Outsourcing
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