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Outsourcing => Employment Even During Recession

  • By admin
  • October 1, 2013

During the Great Depression of the 1930’s, the greatest problem that was faced by the common mass was the utter lack of employment opportunities. With most of the businesses shutting down, people lost their jobs, and with that their means of livelihood also. Impoverishment followed. The recession of 2008-09 also saw the problem of unemployment. But, it also witnessed a rather strange phenomenon. Employment actually increased in a certain sector of industries, which went through a blooming phase during that time. This particular sector of industries is “outsourcing”.

Many companies outsource their services during these tough economic times at low prices to other companies who need them at minimum cost. For example, a hospital might buy the services of a catering company to save time and resources. It also helps them to focus on their medical profession more closely. Similarly, an analytics firm may hire the services provided by an IT company for looking after the computer systems, network connections, provision of required software and other technicalities. These days, outsourcing can be sited everywhere. A simple example would be Pepsi outsourcing its products to KFC. Since the past two decades, many outsourcing firms, like Sodexo, Compass, G4S, Serco etc., have been blooming.

A study by the organisation of ‘Computer Economics’, titled “IT Outsourcing Statistics 2010-2011”, has revealed that spending in outsourcing has increased from 3.8% to 6.1% during 2008-2009. In 2010, the spending rose to 7.1%. The rise in outsourcing expenses (out of total IT expenditure) though, as per John Longwell, the Vice President of Research at Computer Economics, can be partly accounted to the decline in overall IT spending. But, obviously, one cannot ignore that the IT sector industries “are outsourcing a greater portion of their IT functions” these days. In Longwell’s words, “The recession seems to be accelerating an ongoing trend, but there are other factors. We’re seeing a sharp rise in the number of organizations outsourcing applications to SaaS vendors, for instance. Cloud computing is a development that will result in more money being spent with outside service providers, regardless of the macroeconomic climate.”

Another research conducted by the Warwick Business School has also revealed the same patterns. It has additionally indicated that requirement of “innovation” is the driving force behind this rise of outsourcing. Firms looking for new ideas and innovations are increasingly opting for outsourcing. Companies that are specialized in innovative research outsource their high-skilled-services at low rates of costs. This has propelled the rising trends in the business returns of the outsourcing industry, encouraging them to employ more workers.

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