Globalization Trends: E-Commerce and Outsourcing

Globalization Trends: E-Commerce and Outsourcing

Outsourcing describes the process of contracting some of a company’s functions to an external company. This means that some of the tasks that would otherwise be handled by the company’s own team of personnel are given to a contracted firm. Where this is done with members of another country, it is called offshore outsourcing. Any business, small or large, may decide to outsource in order to streamline its assets for comparative advantage. This enables the company to meet its target goals and objectives (Goel, 2007).

Organizations decide to outsource various tasks due to some important reasons such as cutting down operating costs, getting access to dynamic capabilities, enhancing company focus and saving internal resources for other important purposes. Invention of technologies and dynamic market changes has called for outsourcing in business organizations. Outsourcing helps ensure efficiency and continuity in business since in the business world, workers may not always guarantee living up to expectations. For instance expanding information technology and development of new business models has had substantial impacts on the sort of out sousing relationships applied in different business models (Engardio & Arndt, 2006). Some countries that have benefited from outsourcing of services include India, China, and some other countries in Eastern Europe. These nations have become centers of outsourcing thus gaining a lot in terms of foreign direct investment. Outsourcing has aloe helped these countries gain foreign currency besides creating many jobs for their people. Therefore, the trend of outsourcing has created enormous opportunities for these countries. Indeed, some of the key industries that have been critical in this activity include IT, Technology, and financial services (Goel, 2007).

Another trend that has been facilitated by globalization is e-commerce. E-commerce has changed the way businesses conduct their activities. Currently, the number of people and businesses using e-commerce has grown substantially in the last decade. Indeed, no business can grow now without integrating e-commerce in its corporate strategy (Forster & Browne, 2007). The main reason for the increased demand for e-commerce is its efficiency. The service has transcended traditional boundaries and has made the world look like a small village. It is now possible for a company to conduct business with client miles away and meet their needs instantly. This has reduced costs of doing businesses. In addition, the use of the internet has increased the flow of information tremendously. This has forced businesses to resort to the use of the web and e-commerce in their marketing endeavors (Forster & Browne, 2007).

E-commerce has benefited many countries across the globe. For instance, China, India, and Russia have benefited a lot from e-commerce. China has set up IT services to support e-commerce for many corporations at a relatively cheaper cost than in Western world. Because of comparative advantage, these companies can meet the need of their clients with a click of the mouse (Goel, 2007). E-commerce has benefitted all sectors of society, including telecommunication, retailing, healthcare, and manufacturing. It is now possible to do shopping online, purchase products from far countries within seconds. If one needs a certain book, he or she does not need to go to the nearby library. E-commerce centers such as Amazon have changed the way one can buy a book. Healthcare institutions nowadays use the internet and e-commerce to offer advice, prescription, and radiology clinics to their clients, among other services (Goel, 2007).

In summary, outsourcing and e-commerce are two globalization trends that have revolutionaries the way people and businesses conduct their activities. Outsourcing allows a company to deal with core activities while those that they cannot handle effectively are given to other people. In some cases, the contracted firms are usually spread across the globe. On the other hand, e-commerce has created an easy away for business to market or sell their products online. This has resulted in reduced costs of operations.

References

Engardio, P. & Arndt, M. (2006).The Future Outsourcing. Bussiness Week,: 32-37.

Forster, J. & Browne M. (2007). Principles for Strategic Management. London:Macmillan Press.

Goel, R. (2007). E-Commerce. New York: New Age International.

 

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