(stream 1)
Dr Ayim
THE EFFECT OF
OUTSOURCING IN A
RECESSIONARY
ECONOMY
INTRODUCTION
important. Global trends have had an impact on the processes and outcomes of
relation actors to think differently about their goals. The current global
economic crisis has been interpreted in many ways, chief of which is that it
depression of the 1930s which saw huge loss of wealth in both the money and
capital markets around the capitalist world and led to actual and attempted
suicide by many investors. It was a crisis that arose from the failure of the
different states and countries. The Nigerian economy faces the rippling effects
crashes in the money market. There is need to understand the dynamics of the
present global economic meltdown with careful study and examination of the
issues involved. The Nigerian economy has continued to witness renewed and
declining businesses.
to avoid mass retrenchment. This is because in many ways the scheme is cheap
and easy to manage unlike direct sourcing of staff for employment. Other
strategies to make staff into contract personnel are also a welcomed strategy
The term "Outsourcing" is generally used when Companies contract out certain
(Vander, 2006)
Importance of outsourcing
Outsourcing today has become an essential revenue and growth strategy for
resources.
outsourced, the management gets more and effective time to explore new
words, a successful offshore outsourcing process can help reverse this ratio.
Outsourcing can also help companies to have access to new technologies that
might not be used in their company. This is mainly because the offshore
the benefit of 24-hour development cycle. Receiving round the clock service
efficiencies, lower costs, improved flexibility, higher quality, and a greater ability
fleets and floating factory ships of the late eighteenth century (Relocating the
Back Office, 2003), Economist Arthur T. Denzau describes the more recent
example of Motorola in the 1960s, when the company outsourced its labor-
often the motive for outsourcing, the move allowed Motorola to compete
effectively with other firms in the United States and, later, Japan (Brian and
Marilyn 2004),
The scale of outsourcing in the past few years dwarfs the levels witnessed in
than ever, involving large numbers of both developed and developing countries.
For example, many American companies have outsourced jobs to China and
phenomenon that Nigeria, the global leader in outsourcing business, now faces
competition from many other parts of the world, including elsewhere in Asia
and even the East European countries that joined the EU in 2004. Typifying
water company, set off a political storm in the small town of Vergeze, France,
RELATED LITERATURES
business area and provide a unique value for customers (Behara, Gundersen, &
lower costs, improved flexibility, higher quality, and a greater ability to achieve a
competitive advantage
company that allow it to supply products and services that uniquely add
provide the product or the service that the customer value and want to buy
(Greaver, 1999)
outsourcing strategy.
CONCLUSIONS AND RECOMMENDATIONS
preceded by radical changes which lay the ground work for process re-
advantages are obtained from specialization and that the customer receives
divided for analytical purposes into strategic and operational nature. The main
expanding its core competences. On the other hand, among the operational
carried out by specialized firms and reductions in permanent staff, which then
become variable costs related to the level of activity. As for the disadvantages of
a strategic nature, the most important are the loss of control of activity done
difficulties related to the making of the contract arising from the effects on
human resources.
by labor laws. These firms may limit themselves by viewing outsourcing merely
labor legislation is being in accordance with the needs of firms for more flexible
First of all, outsourcing usually reduces a companys control over how certain
services are delivered, which in turn may raise the companys liability
Secondly, job outsourcing should come from the workers themselves. That is,
system; enjoined to reduce the outsourcing strategy and improve their service
in their mindset, which means that they must manage their contractors and