International outsourcing in emerging and developed economies: an empirical study

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International outsourcing in emerging and developed economies: an empirical study

Introduction

In this essay we will discuss the article international outsourcing in the emerging and the developed economies: an empirical study. We will also consider the major issues along with some minor issues in the essay. We will also present the specific facts discussed in the essay. I will also discuss the strengths of the arguments given by the author and whether they are logical or not. In the conclusion I will present the personal assessment of the article.

Discussion

Major IssuesThe authors suggest that most of the companies today are engaging in outsourcing, mostly in the developing countries. The author has identified that the international outsourcing market is currently expanding at the annual growth rates of between 15 and 40 per cent. Most of the outsourcing contracts are given to the emerging economies such as India and china which almost take the lion's share in the total international outsourcing. International outsourcing the author suggests that is a source of major foreign investment for most of the emerging economies. Most of the multinational enterprises also outsource their operations into the developing countries like India and China due to the availability of the cheap labor. According to the author they do not only reduce their costs but also increase their exposure and the market share.

There are many economic and non-economic factors which are important for the companies deciding to outsource. The country specific risk, higher education participation, real GDP growth of a country, average hourly wage and technology infrastructure are some important factors that a country considers before outsourcing its operations in any of the country. Among all the decisions regarding the outsourcing, cost reduction is very important for the company deciding to outsource its operations particularly the difference in the labor wager rate in the parent country and the country in which it decided to outsource. Moreover, the empirical findings of the article suggest that three variables are very important for the outsourcings which include average hourly wage rate in the developed countries and internet access rate and tertiary education in the emerging countries.

Minor Issues

Some of the minor issues which the author has discussed in the article include the overall security situation of the country in which the company decides to outsource its operations. Similarly, the author has identified that there should ...