It Outsourcing: Article Analysis

Singh (2003) reported in The Financial Times that British Telecom had decided to effectively "outsource" some of its call center operations by opening call centers in India in the cities of New Delhi and Bangalore. The rationale behind the move by the British telecommunications giant is that the cost of operating domestic call centers -- which includes both information technology hardware and software costs as well as costs for human capital and staffing -- have escalated to a point where the call centers are simply unprofitable. Rather than functioning as a value-added service that increases corporate profitability, the call centers operated in the United Kingdom by British Telecom are losing money. As Mike Schraer, British Telecom's Director of Commercial partnerships put it, "To stay competitive to have to outsource to low-cost destinations (Singh, 2003, p. A1).

The problem is significant, says Singh (20030, in that more and more companies in the highly advanced, industrialized and technology-rich Western nations are turning to developing countries of the Third and Second Worlds to find low-cost human resource solutions. In the case of Great Britain, Singh (20030 reported that relatively few jobs have thus far been outsourced abroad; however, there are indications that the use of overseas outsourcers by British companies will continue to increase over time as the costs of doing business at home also tend to

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nclude outsourcing. While many workers fear that globalization will lead to a loss of domestic jobs and some critics of globalization believe that quality issues may arise as a result of globalization, the fact of the matter is that globalization is here to stay (Hill, 2003). New global human resource management activities and processes are being created to respond to these challenges. Workers in the West are likely to be confronted more and more frequently with moves such as that recently undertaken by British Telecom. Point of View and Significance From the perspective of this writer, the case of British Telecom must be understood as signaling a revolution in human resource management and in the ways in which technology dependent businesses elect to secure services. Business models are clearly changing and Singh (2003) is correct in the assertion that we are on the cusp of an important revolution. The case for outsourcing is in many instances quite compelling, but it is equally important to recognize that outsourcing introduces some important issues related to human resource management. Rejecting outsourcing because of its potential effect on domestic employment is simply unrealistic. What is needed is the d

Category: Business - I