INTRODUCTION AND SETTING THE CONTEXT
The movie-Outsourced- is about the challenges that come with job outsourcing and its impact on both the employees and consumers. The parties involved seek to get the best out of the situation as well as maintaining their previous stature. In today’s global economy which is continually evolving, the movie elicits some of the features of modern economics which include:
a) Emerging or developing markets increasing their global financial power.
b) Global financial institutions seek redemption through transformation and modification.
c) Government enhancing its association with the private sector
d) Rapid advancements in technology create a digital world that is mobile and smart
e) Demographic changes transfer the global workforce
With the D270 class aiming to improve students’ and managers’ abilities to identify, analyze and execute strategies in the rapidly transforming global business milieu, the movie relates in that from the main character’s(Todd Anderson’s) point of view, that one can intelligently utilize the available resources for the betterment of an otherwise hopeless circumstance. He (Todd Anderson) goes to a new country with a completely different sociological, political, financial, and infrastructural setup and guides a previously underperforming call center into an proficient company. With the increasing diversification, it is inevitable to employ the best skills to make the best out the global business.
The firm is a centralized office that receives or transmits huge volume of requests by telephone regarding its products- kitchsy novelty items. It is a telemarketing company known as Western Novelty. It was initially based in Seattle, U.S.A, but is outsourced to a small town in India. This was meant to cut down on expenses as they could get eleven workers in India for the priced they were paying one American. Later the company is outsourced to China, a clear indication that the management wants to spend the least in provision of its services to gain more profit.
India with a population of about 1.2 billion people, offers a good number of viable employees. It is also ranked in the top ten in terms of geographical size. It is considered as a newly industrialized country. However, it still faces the challenges of poor working and living conditions, poor nutritional services, below par housing conditions and inadequate public healthcare which renders the citizens with no choice but to avail themselves for cheap labor. These are the very reasons why top managers not only from U.S.A but also from Europe are interested in the country.
According to Boomberg business week, there was pretty much no options for American companies in outsourcing of jobs, hence their only option was India in a few years back. That has however, changed with the emergence of options in Latin America and Eastern Europe. This is as a result of the ideology that outsourcing is not only about cutting down on wages but also understanding the business context and the needs of the consumers as expressed by Phil-Fersht. This has seen more outsourcing companies emerge in Latin America and Eastern Europe compared to India.
This is a massive blow to the Indian economy which had previously enjoyed a lot of economic growth evidenced by the transformation of backwaters like Chennai into vibrant cities. The American employees on the other hand have had a chance to go to better countries in terms of infrastructure, hospitality and technological advancement.
In 2011, there were about 54 outsourcing companies opened in Latin America and Eastern Europe compared to India’s 49 according to Bloomberg businessweek’s report.
CULTURAL/ SOCIOLOGICAL ANALYSIS
The people of India have had continuous civilization dating back more than 5000 years ago. This was a culture oriented on commerce and basically depended on trading in agricultural products. However, the civilization declined around 1500 B.C., probably due to changes in the environment since weather is a major determinant in farming. It was followed by several proceedings before the British, through English East India Company in 1619, established their first South Asia outpost at Surat, India and finally controlled the present day India by 1850s. This eventually led to an uprising from the united Indians which led to the British giving in and on August 15, 1947, India gained independence but remained within the Commonwealth. Jawaharlal Nehru became the Prime Minister. This was followed by a period of stability before weak coalition governments took over India clouded by several assassinations of top politicians.
India has a population of 1.2 billion hence very populous compared to several other countries in the world including U.S.A. The language groups in India include Hindi and English as the major ones followed by several others such as Gujarati and Bengali used by smaller sections of the population. This poses a challenge in the communication especially to the foreigners who also have to deal with a completely different accent.
According to the movie “Outsourced”, Indians are depicted as very social people. They are willing to go to any extent to get what they want but retaining their respect to others. It is a highly religious culture with extreme admiration accorded to their elements of religion such as treating the cow with a lot of respect to the extent of allowing it to wander into offices and when going into the temple, it is mandatory to remove shoes. This is especially reinforced by the fact that four of world’s major religions originated from India, one of them being Hindu religion and the other Bhudhism. These religions have been strengthened by the introduction of Zoroastrianism, Christianity, and Islam in the 1st millennium to further add on the diversity in religion. Various symbols for their gods are kept in a variety of places and there are strong beliefs to their capabilities such as the god of destruction which was associated with the fire that affected the ferry.
These cultural practices and customs have a great impact on the performance and running of the firms. This is evidenced in the movie when the MPI (minutes per incident- time it takes to resolve a customer’s problem),is greatly reduced when the Indian workers are allowed to bring their cultural, personal and religious paraphernalia into the office. It is therefore important for the firm to appreciate and embrace the significance of the Indian culture in provision of services. To the American customers it is not a direct influence but the impact is on the improved customer services.
The appreciation and integration of both cultures is therefore vital for profit generation of the firm. However, some of the Indian manners and actions are wanting, these include being noisy, stealing and disrespect of foreigners such as shoving them. Unfortunately, the American employees have to withstand such unaccustomed conditions while in their line of duty
POLITICAL/ LEGAL ANALYSIS
In the 1991 elections, Congress returned to power as a coalition government, with P.V. Narasimha Rao as the Prime Minister. This Congress-led government initiated a slow but systematicl process of economic liberalization. These reforms exposed the Indian economy to global business and investment. India's domestic politics took a new twist, as the nationalistic ideologies of the Congress Party gave way to traditional culture, creed, zonal, and ethnic alignments, which eventually lead to the formation of a number of small political parties with low national appeal.
The change in governance allowed for political and economic agreements to come in place with other countries such as U.S.A. Due to the favorable political background, firms such as “Western Novelty” have had a chance to set up base in India. This is of advantage in that they can get to India with ease and even enact their policies in the working environment for best financial reward.
To a firm like Western Novelty, insecurity may be a concern as it is operating on foreign soil. It is therefore crucial to have a stable political regime; this eliminates issues that may arise from political instability.
India’s economy is at an impressive 10th position in terms of nominal GDP with an estimate of 4.457 trillion U.S dollars as of 2011 and placed 3rd in terms of purchasing power parity- with an estimate of 1.848 trillion U.S dollars as of 2011- in the world. Although the GDP per capita and purchasing power parity are reported to be much lower, it is considered by many as an emerging economic powerhouse. In 1991, the government liberalized the economy, forced by an acute balance of payment crisis. This led to a free market system with a capitalist approach. This proved rather beneficial as evidenced by the GDP yearly growth rate of just about 6% in the last twenty or so years.
The currency is the Indian Rupee with a current exchange rate of 54.42 Indian rupees to one U.S Dollar. With several top I.T. companies currently situated in India, this Asian tiger is well and truly on the right path to becoming the world’s most favored outsourcing destination. India also has a considerable number of computer literate people. This means that the companies seeking to invest in India will have not only an increased work force but also a large consumer base for their products.
With the large population, it is clearly evident that several job opportunities will have to be created to accommodate more workers. This, and coupled with the fact that Indians are friendly people who not only socialize with locals but warmly welcome foreigners as well, will have encouraged the foreign firms. Americans on the other hand have been reluctant to accept the change in service provision preferring their own to the foreigners especially with the number of people losing jobs due to outsourcing. This however changes with time as the cheaper services appeal to them. To American firms, it has been of great advantage that they have a cheaper workforce, maintained their American consumers and opened up a new customer base for their products.
With the government creating a liberalized economy, it is a clear indication of their intent on providing a favorable business environment for various companies. Since 1991, India has improved its improved its political and economical ties with Europe as well as the United States of America. The current government has also enhanced foreign economic relations with foreign countries particularly improving relations with the U.S.A. Prime Minister Singh and President George W. Bush finalized a landmark U.S.-India strategic partnership framework agreement on July 18, 2005. These factors have made it easier for foreign firms like “Western Novelty” to infiltrate and prosper in India.
The transport system in India is completely different from that in the U.S. This creates a challenge in that Americans who come to work in India have to deal with smaller and congested vehicles, crowded roads, different kind of train system and even non-advanced ferries. The buildings are also not in the best conditions as they are smaller, congested and of very poor condition. The situation forces American firms to build their own buildings to accommodate their overseas offices. This increases the expenses of outsourcing the jobs.
India, as a country has got several access points, both from the sea and the land. It is bordered by the Indian ocean to the south, Arabian sea to the south west, the bay of Bengal to the south east, to the west lies Pakistan, while the Peoples Republic of China, Nepal and Bhutan are tucked to the northern and eastern sides and finally by Myanmar and Bangladesh to the eastern side. It also has a long coastline that harbors several ports. The country’s climate is primarily tropical experiencing regular heavy rainfall, high humidity and fairly high temperatures. In contrast, the climate of the U.S.A.is of a temperate nature consisting of 4 distinct seasons: summer, winter, spring and autumn. The shift in weather and climate for outsourced American employees in India is drastic and may affect their productivity; it therefore requires a considerable period of time to adapt to the new weather. This leads to underperformance and decreased profit margins for the firm.
OVERALL ANALYSIS AND RECOMMENDATIONS
The kind of social, political, economical and societal characteristics in India clearly shows that there are both opportunities and challenges that await American firms seeking to outsource their operations to India. These factors have to be clearly analyzed and deduced before a decision is made to transfer operations from America to India.
It is clearly evident that Indians are ready to embrace not only the foreign firms but the foreigners as well. This is brought out in the movie “Outsourced” as several workers seek to:
a) Work harder in learning American culture to serve their American customers better
b) Acquire the American products that they are marketing and selling
c) Work at night to accommodate the differences in time zones between the two countries
The relationship that develops between Todd and Asha further cements the fact that the locals approve of the Americans.
Working freely under no pressure from the government, local or central, also allows the firm room to express their ideologies in the working environment. This is important in that a stable political environment especially in a foreign country goes a long way in improving the quality of services provided by the firm.
However, the poor conditions of the housing and transport systems offer challenges that have to be properly addressed. It requires the firm to construct their own building which increases the expense of setting up the operations in India. The difference in food, especially from the street, also poses a challenge for Americans working in India.
When the advantages are pitted against the disadvantages in setting the firm’s operations in India, it is clearly evident that it is more economical than running operations from America. I, therefore, recommend the firm to enter and establish its operations in India.
To other telecommunicating firms facing annual loses, I recommend that they also outsource their jobs to India. This however will impart negatively on job opportunities in America, so it is better if some of the operations are outsourced while some are kept in America. The loss of employment has been a constant bother, drawing reactions from several public figures such as President Barrack Obama who has championed against job outsourcing.
Other firms should also consider regions such as the Latin Americas and Eastern Europe especially Brazil, Argentina and Poland for outsourcing of operations due to greater technological advancements and the number of computer literate work force.