Business Process Outsourcing Companies Amidst Criticisms

Recent reports of US President Barrack Obama’s disapproval of business process outsourcing companies have stirred the business community. The case is that President Obama, like many business analysts, believe that the BPO industry will prove damaging to businesses in the US by lowering national employment and internal business activity.

A knee-jerk defense of BPO against criticism from Americans is to point out that US companies have long been outsourcing its operations to other countries. (A high profile brand shoes, for example, have been outsourcing the manual manufacturing of their products to Asian countries where labor price is a lot cheaper.) BPO is only getting attacked now because it is threatening to backfire on American economy. In this light, the Americans’ clamor for “their jobs” doesn’t seem so much as righteous as being somewhat hypocritical.

The situation, however, is not a simple moral quandary. In closer inspection, it will be clear that there is a great need for companies in highly-industrialized nations to outsource some of their business operations to less-developed countries as this significantly reduces operational costs. The problem, critics say, is that BPO is shifting jobs. Yet, even the real effect of the proliferation of business process outsourcing companies to the employment rates in countries like the US and UK are still inconclusive. Though states like New York and Florida have reported drops in employment, Michigan and Texas have found a positive change in their employment rates. (Critics of BPO may take a small comfort that employment rates in outsourcing countries have not surged up either.) What is certain though is that outsourcing has kept some large business afloat and small business to grow, and that means jobs.

The situation for many companies is not that they only want to get more for less, but that they simply can’t afford getting local workers. For many of these companies, retaining a domestic workforce will be calling on bankruptcy – and when that happens, everyone loses. The supply of outsourced services from eastern countries is, then, only a reaction to the demand formed in the west. So, are Asian countries – especially India, China and the Philippines – taking advantage of the situation? Well, yes, but not in the way that an unscrupulous vendor will sell you defective goods. Rather, they have only found a demand and are filling it at the least possible cost. It isn’t market abuse, it’s basic economic law.

One other aspect of BPO that its critics often fail to remark upon is how this system affects the end customers, the final consumers of a company’s products or services. How this works is that by reducing its operational costs, companies can also reduce the price of their commodities; the amount saved can then be passed on to the consumers. Therefore, without outsourcing, business will be forced to increase their prices – a situation no one will be happy about.

Outsourcing will stay as long as there is a need for it. In the future, it seems that it will remain an important economic strategy. Business process outsourcing companies have proven their value in just a short span of time. It remains to be seen what else they can do.