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KPO : More advantages than worries

Outsourcing was the key issue which Harry Harris, President of a California-based consulting group, used to tie together developments in three continents. A staunch defender of the global economy, he insisted that outsourcing was a crucial business strategy for companies that wanted to remain competitive in an age of globalization.


Dr Harris, while speaking at a meeting organized by the US embassy to Belgium, explained why American companies had an upper edge over their European counterparts when it came to outsourcing. Admittedly, it was from within the US, that textile mills located in the New England states started shifting production to the southern states to take advantage of their lower wages. As per Dr Harris, the rise of the Chinese economy, followed by the Indian economy, means that US and European companies have to outsource if they want to remain competitive.


Dr Harris, who has visited more than 100 countries to study global management, explained that during his recent visit to India he had been impressed by the changes he found in the great urban centers. Dr Harris was categorical when asked whether India or China would emerge the winner. It was obviously China, and India would have to grow at an even faster rate in order to catch up China. Even then, India remains an important outsourcing destination. Approximately four out of 10 outsourcing projects go to Asia, and to India in particular, according to a study by the Geneva-based UN agency, UNCTAD.


European countries continue to remain the main targetted destinations for European companies, with Hungary, Poland and Romania attracting the most outsourcing projects when it comes to Eastern Europe. Dr Harris pointed out that German companies were slowly outsourcing to Eastern Europe. Companies located in the southern part — Italy, Spain and Portugal — face a linguistic problem when it comes to outsourcing. Some countries are now starting to explore the possibility of outsourcing to countries in Latin America, such as Brazil, and to Mexico.


Dr Harris, president of the San Francisco-based Global Management Associates, cited the case of American hospitals that send X-rays to India for analysis by Indian doctors.
While Northwest Airlines had moved aircraft maintenance to Asia, a Chinese airline was having its fleet of Boeing aircraft serviced in San Francisco. Dr Harris noted that outsourcing was now a political issue in the US, although it has lost its sheen as a main issue. The Democratic presidential candidate, John Kerry, stated the view that American companies that outsourced were traitors. The German Chancellor, Gerhard Schroeder, also voiced similar sentiments but can not check the growing sentiments of outsourcing.


Similarly, a Belgian member of Dr Harris’ audience challenged his view that outsourcing was a necessity if European companies were to remain competitive. He argued that Finnish companies were doing very well, without recourse to outsourcing. Dr Harris pointed out that Nokia was not doing quite as well as before and outsourced few activities to Asia.


Dr Harris also referred, that what had contributed to the underlying strength of the USA’s economy: its open door policy as regards professionals in the IT and other sectors. Any visit to the research laboratories of Texas Instruments in the US, one can note that a high proportion of the names on office doors were Asian, many of them Chinese and Indian.


Looking to all above, what can be stated precisely is the fact that there is no need for any country to feel worried about the effects of outsourcing. There are reasons to learn from the companies which have opted from this route and have gained tremendously in terms of saving costs without sacrificing other crucial parameters.


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