BPO
How business is done
Today it is becoming increasing rare to find large
businesses having complete end to end operations. It comes down to a simple
fact if when someone else can do it for your firm and it is not part of your
core operations it makes sense to outsource.
From an accounting standpoint it could be said that it makes sense to
outsource when it becomes cheaper than your combined fixed and variable cost. In
essence when you outsource it becomes a purely variable cost.
So the question then becomes, why the recent surge in BPO in
our recent history. I think that the answer is information technology. I think
that there has been a lot of pushback as we see jobs being outsourced and lost
due to technology and this is not the first time. I was reading an article and found out that at
the turn of the century something like 90% of Americans worked in Agriculture
and a lot of jobs were lost as farm machinery became more and more predominate.
In the short term I think that it would be little console to those losing their
jobs to let them know that the advancement would be better for our economy in
the long term.
I think that today we
see history repeating itself again just re-wrapped and repackaged. As we have
lost a huge amount of manufacturing jobs due to that fact it can be done cheaper
elsewhere we must adapt and go through the growing pains again. Today’s IT
further enables BPO by lowering transaction costs, helping supply chains, and
tracking quality more accurately.
Question - How do you feel about outsourcing and do you think
America should cling to manufacturing?
Jeremy R. Squires
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I think that this is a great topic. I agree that as our technology continues to improve and progress, we will need less and less manual human labor. This could be viewed as bad, like you said, or it could be viewed as progression. But what do you tell those people that lost their jobs to a machine? As you mentioned, they probably won't be too happy even when you tell them that it's for the betterment of mankind. But when you think about it, do we really want those low-wage jobs here? I think that that just gives people an easy way out. They won't have to push themselves and reach for higher education, because they can just take that low-wage manual labor job. With those jobs out of the way, people are left to compete for the higher paying skill-required jobs. More and more people are going to college and getting better paying jobs than maybe they would have if those ditch-digging or cotton harvesting jobs were still available in as high of numbers as they were in the past. To summarize, I am a proponent of outsourcing the low-wage jobs.
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