Outsourcing by North American companies has brought many jobs to people in India and saved businesses money; however, it poses dilemmas that are both cultural and ethical in nature. Currently India is a major player the in the world of Business. ” The Indian economy is the world’s tenth-largest by nominal GDP and third-largest by purchasing power parity (PPP).” Part of this success is due to the Indian Business Processing Outsourcing (BPO) initiative. Due to this initiative it is estimated that over the next 10 years over 3 million service industry jobs and 136 billion dollars in US wages will be lost to the outsourcing market to countries such as India, Russia, China and the Philippines (O’Neil, 2003). Some of the major issues that are arising due to this trend are: the loss of North American jobs, the clashing of cultures and the issues around ethical business practice.
The outsourcing of IT jobs has had a major impact on the North American economy. Currently, “anywhere from one-half to two-thirds of all Fortune 500 companies are already outsourcing IT to India, and many would agree that it's one of the best ways to cut application development and maintenance costs. United Technologies and its subsidiaries save $30 million a year outsourcing app development and support to India.” (Overby, 2003) India represents 60% of the offshore white-collar jobs market. It is presently a growing collection of high-value jobs leaving America. An interesting and concerning method of learning different cultures in outsourcing presents an obstacle firms loosely attempt to manage.
Another issue that has arisen with the outsourcing of jobs is the alignment of different personal and management cultures between firms. “Charles L. Gay, managing director of Shreeveport Management Consultancy believes that: “The human resourcing issues are one of the greatest challenges to the success of an outsourcing initiative.” (Kobayashi-Hillary, 2004) Outsourcing projects can suffer because of communication problems, therefore, getting the management culture right is a fundamental part in making outsourcing work for successful business. Often learning a foreign culture is learned through television, journalists have reported many call center staff learning American culture by watching Friends, or in the case of the British, Eastenders. Two completely different cultures talking over the phone could cause mayhem and often time’s extremely strong accents interrupt the ability to understand one another. English language recruitment assessments have loose screening processes and low efficiency. Currently many well educated Americans experience difficulty finding work due to outsourcing.
There are also major educational discrepancies between North American and Indian IT employees. North American IT employees often have 4 years of a University education before they are hired. However, Indian employees are recruited and trained fresh out of high school. Large vendors such as Walmart are currently looking to step up IT outsourcing with more India vendors. “Wal-Mart, has said it continues to be interested in increasing its presence in the South Asian country. India’s $70 billion software exports sector provides IT services to several top companies in the world including JPMorgan Chase and Co., Merck and Citigroup Inc.” (Sen, 2013) As a rule the companies engaging in these outsourcing activities put an emphasis on social responsibility and ethical actions. They must hire teams specifically to maintain CSR because of social media and news releases that control the way the public may view a company. Although there are many people in India ready and willing to work for a cheap price for North American companies, they are not getting the equivalent of hiring a well-trained North American. Another job becoming outsourced is legal