Business without Borders
By Dan Boudreau
In business, when you perform a task yourself or have an employee do it for you, that task is said to be handled in-house. When you contract someone offsite to do the same work—whether next door, across town, or offshore—you’re outsourcing.
Over the past few years there has been an increase in the outsourcing of work to parts of the world with lower labour costs. Some jobs are transportable and lend themselves to easy outsourcing, such as bookkeeping, accounting, website and software development, and graphics design. North American entrepreneurs are contracting out almost every type of work that can be managed remotely, including research and development, IT tasks, marketing, selling, and customer support.
With more and more of our administrative and creative tasks outsourced to places like India, and manufacturing jobs migrating to China, even the smallest of businesses are obliged to jump onto the outsourcing bandwagon just to stay competitive.
When we outsource to local contractors, the money remains in the local economy. When we outsource to India or Korea or China, more of a global, inclusive view is needed in order to connect the economic dots. While it might seem prudent to view offshore competitors as enemies—nobody wants to lose their job, and local economies are negatively impacted when jobs leave an area—there are obvious economic benefits to the areas that win the outsourced work.
Technologically, we now have the capacity to share work across borders, right down to the little guys working from home-based offices. But economically and attitudinally, we are still grappling with the realities of local work going to outside contractors.
Cost reduction makes a compelling argument for outsourcing. From the small business owner’s perspective, it makes sense to save money wherever you can. Yet some will fault local business owners for outsourcing administrative or creative work to a lower cost jurisdiction.
There are many who would like to keep jobs local at all cost. Yet, the generously populated Wal-Mart parking lot suggests that a good few shoppers are enjoying competitive prices and increased buying power. While visitors from smaller, outlying communities leave town, trucks bulging with cheap goods, the shop owners back home struggle to keep their doors open.
And then there’s the value chain. From an economic perspective, some lower-paying jobs are less attractive, while others (that would be the higher-paying jobs) are more desirable. From a purely Canadian perspective, we might prefer that all Canadians have higher paying, easier jobs, and that we outsource the less desirable work. This would seem to be a mutually beneficial solution to the outsourcing quandary, but life doesn’t always dole out solutions in such balanced proportions. The world is teaming with labour forces that would willingly compete for any jobs we offer, desirable or not.
So, should small business owners outsource work to offshore contractors? There’s little doubt that each owner will need to find his or her own path through the outsourcing maze. Business demands an ongoing practice of frugality. While smart buying is not only about the price, over the long haul, lower costs will usually triumph. If cheaper outsourcing gives your competitors the edge, they’ll take you out on price. In a global marketplace the small business owner must shop wisely in order to compete and stay in business locally. As long as the quality can be maintained, the attraction to outsourcing cannot be ignored.
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