Contemportary Developments in Management Free Essay Example, 2500 words

Firms tend to outsource the non-core and repetitive functions while keeping the core functions within their control. Pai and Basu (2007) refer to contracting of tactical non-core functions as process level outsourcing and the clients expect end-to-end packaged services that require little customization. The chart below demonstrates the amount of outsourcing that takes place across different functions: The shortage of qualified labor in US and Europe was directly related to outsourcing. This shortage was partly caused by the IT boom of the 1990s and the need for technicians for the new e-business (Gonsalez, Gasco, Llopis, 2006). The problem of fixing the Y2K bugs was another strong reason that increased outsourcing to India (Sourirajan, 2004). The US-born engineers that entered the workforce were not trained in this age-old technology. Besides it was considered low-wage, low-prestige job to work on COBOL and FORTRAN when technologies from Microsoft, Oracle, and Apple were available. The Y2K conversion required well educated, computer literate English speaking programmers. This need led to the practice of outsourcing. Due to the economic situation in the US, the high technology firms like Microsoft, Dell, Cisco, PeopleSoft, Oracle, Accenture, Ernst Young and IBM, were under pressure to reduce costs. We will write a custom essay sample on Contemportary Developments in Management or any topic specifically for you Only $17.96 $11.86/pageorder now In the beginning of the 21st century, the labor market was relatively poor. The business success of the large and medium corporations in the US is largely dependent on the consumer. Thus because of the poor labor market, there was a downturn in the stock market. Investor sentiments were low and firms experienced the reduction in trading volume. This affected the demand for computers and ultimately put pressure on the high technology companies to reduce costs. This is how offshoring increased during this period which was considered to be exporting good American jobs to low-wage nations (Sourirajan, 2004). The protectionists in the US allege that job losses are inevitable. The US high-technology industry is increasingly reliant on sub-contracted, non-unionized and illegal labor as well as the exploitation of cheap labor in third world countries