You cannot understand the morning news, know where to invest your money, or think about the future unless you understand this new system, which is profoundly influencing virtually every country in the world today. (1999, pg.89).
In today's electronic global economy, globalization is inevitable as it is a reality. The world is becoming smaller, and "walls" between nations are disappearing, mainly due to computerization and the internet. Communist nations such as China are starting to open up their markets. Southeast Asian countries have been thriving in the past few years as developing economies. In the system of globalization, every nation wants a piece of the economy pie. As a result, competition is becoming tougher, and only the strong will survive. Those companies that want to remain strong will begin, or continue to outsource.
Outsourcing is simply the transfer of operational responsibility of either business process or infrastructure management to an external provider. Today outsourcing has become a standard business practice across every industry. There are reasons why companies are starting to outsource more, and those reasons can be extremely promising, especially with our economy being in such bad shape.
The recent economic crisis worldwide has brought outsourcing to the forefront as a way of reducing cost and better shaping business for long-term competitive advantage. Companies can save millions of dollars a year by sending work to other countries. Not only are the costs of supplies and raw materials cheaper, but the operating costs overseas are less expensive as well. According to Gartner Analyst, Rita Terdiman, "cost savings that can run as high as 40% are simply to compelling to ignore" (Julia King, 2003). Ultimately, American consumers get lower prices on goods and services produced at lower costs overseas. .
Terdiman further noted that outsourcing helps companies realize long-term goals to increase IT (Information Technology) staffing flexibility, and gain access to world-class skills so they can quickly respond to business practices.
