Why Globalization Is A Great Trend For Employers And Outsourcers

Since the shift of subcontracting work to outside sources started some 20 years ago, the working environment of the global business world has begun to shift to outsourcing and the use of freelance artists.

It is becoming a rare situation where a company runs all of it operations in-house with no outside sources other than vendors that supply the raw materials for the products that are produced. Today, the shift is to virtual companies. These companies outsource nearly every aspect of their business. It is not unheard of to have the main office in the United States while manufacturing is conducted in China and the accounting is processed in India.

This is not a new trend as demonstrated in the 1998 annual report of the World Trade Organization that used an American car’s value and where it is generated from as an example. No longer is a car assembled and all of its value generated in Detroit like it was in the days of Henry Ford. Today, 30% of an average American car is assembled in Korea, with 17.5% of the components and technology from Japan, and 4% of the minor components from Taiwan and Singapore. 7.5% of the car is from Germany where the design concept is done, with 2.5% of the value being generated from the UK with their advertising and marketing input. Then, 1.5% of its value is from Ireland and Barbados where the accounting has been outsourced, too.  This leaves just 37% of the value to generate an American car form America.

Capitalists have always run the successful economies of the world nations and they turned to outsourcing as a way to maximize their profits many years ago. This has been so with the larger corporations for so long that is was not really noticed until the 1980s when so many jobs were lost in America to cheap overseas workers.

Today, with outsource work going to more and more freelance artists, the globalization of the world market place is a reality. The main stumbling block is the exchange rates of the currencies involved. A good portion of world trade is done with the US dollar and its fluctuation affects the profit margin of a great deal of freelance artists. The management of this aspect of the business is a necessary component to help keeping cost down while maintaining a profit margin that is acceptable by the owners or share holders of the company.

Governmental regulations and cultural differences have hampered the globalization of the world market by placing certain regions in trading blocks. There is no one strategy for outsourcing that can be used because different parts of the world react differently to different things and strategies. The best global outsourcing strategy is to recognize this and subdivide the world up into regions. Apply what works in that region when outsourcing and dealing with freelance outfits for the best results. Just like no two individuals are exactly alike, neither are two different regions of the world.