Outsourcing is not a separate entity operating in relative isolation as compared to the day-to-day commerce taking place in the retail hemisphere. Outsourcing industry is one of the spokes that forms part of the hub, which enables competitive pricing for consumers—and therefore viable trade for Western companies.
Outsourcing is a growing part of the large commercial sum that makes up world markets. Remove outsourcing from the equation, and it will cause upheavals in the global economy the likes of which will be difficult to handle.
Outsourcing is so massive that its rise or slump has repercussions in other markets. In other words, any change in the dynamics of outsourcing will have a dynamo effect, even though they may be rivulets, on Western and emerging markets.
For instance, if GE or HSBC were to cut down on outsourcing, and instead move back onshore, it would cause an immediate rise in prices of their services in lucrative consuming markets such as China, and even India. This loss in competitiveness would cause a decrease in shareholder value, thereby dampening the mood of financial markets.
In fact, financiers and shareholders expect companies to use any method, in this case outsourcing, to maximize return on investment.
The reason why outsourcing has made the world so flat has a lot to do with the intrinsic nature of and expectations from outsourcing.
So far as outsourcing industry in India is concerned, various kinds of professionals joined hands, showed entrepreneurial drive, and tried to match expectations of their clients. In due time, they made a reputation for themselves. And India emerged as one of the most favorite destinations for outsourcing.
Amid protectionist outcry and job losses, people just forgot that Western companies no longer held traditional advantages in terms of technology, management skills, and most importantly, that of low input costs in terms of manpower and markets.
As a result, trade and commerce that used to originate in the West and end in the East, is now originating in the East and ending in the East—this is a paradigm shift.
The shift is rather dramatic. Now the Western markets are fighting to create enough employment to feed local production of products and services. In such a scenario, outsourcing becomes even more attractive for companies—especially those engaged in services, as it does not involve building of plants and other forms of capital expenditure.
The coalescing of economic recession and the competitive powers attained through outsourcing has made outsourcing an essential part of global commerce.
All current and future business plans of companies around the world will have to factor in India as the outsourcing hub to be able to fully compete in emerging markets, as even these are turning to be very competitive.