Is Outsourcing Exploitation or Chance for Developing Countries?

8,659 views

Published on

Published in: Business, Career
0 Comments
3 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
8,659
On SlideShare
0
From Embeds
0
Number of Embeds
13
Actions
Shares
0
Downloads
76
Comments
0
Likes
3
Embeds 0
No embeds

No notes for slide

Is Outsourcing Exploitation or Chance for Developing Countries?

  1. 1. Anıl Sural Graduation Thesis Advisor: Prof. Dr. Mustafa Kibaroğlu
  2. 2. Introduction Is Outsourcing Exploitation or Chance for Developing Countries? Anıl Sural 2
  3. 3. Globalization is a concept that emerged all around the world in the last twenty years. There are five dimensions for globalization. Those are economic dimension, political / security dimension ,technological/ communicative dimension, environmental / demographic dimension and cultural dimension. Especially it means the world becomes a single market. After all liberalization started, it means no strict trade border for countries. Is Outsourcing Exploitation or Chance for Developing Countries? Anıl Sural 3
  4. 4. Multinational corporations are the dominant providers in China's high-end market. US multinational companies choose China for manufacturing side. First of all, labor costs are cheaper when you consider US or Europe. And when they have manufacturing, it is easy to enter domestic market. When they enter, China it means you can go Asia markets. Raw materials in China are cheaper than US. Supply chain and logistics activities are easier then US. These all drive down operating expenses. High population is problem for China. Because when population increases, wage will decrease. There is opposite equation. Is Outsourcing Exploitation or Chance for Developing Countries? Anıl Sural 4
  5. 5. What is Outsourcing? Is Outsourcing Exploitation or Chance for Developing Countries? Anıl Sural 5
  6. 6. Outsourcing means using international cheap labor force and also doing in the countries with cheapest sources of labor and supplies. Some of the companies transfer their internal activities and decision rights of action to outside suppliers or companies. Outsourcing is a situation in which a company employs another organization to do some of its work, rather than using its own employees to do it. Is Outsourcing Exploitation or Chance for Developing Countries? Anıl Sural 6
  7. 7. The main areas in which a business can be effective except outsourcing are finance, human resources, accounting, legal and administrative procedures, external resources, delegating activities. Thus they can save time and resources which provide a great extent. However, the costs are pulled down. Basic manufacturing directing labor costs today range from less than $1 per hour in an emerging country to $6 to $12 per hour in a developed country. In certain U.S. industries, direct labor costs in manufacturing exceed $20 per hour without benefits. Is Outsourcing Exploitation or Chance for Developing Countries? Anıl Sural 7
  8. 8. Top 10 Outsource Countries 1. India 2. Indonesia 3. Estonia 4. Singapore 5. China 6. Bulgaria 7. Philippines 8. Thailand 9. Lithuania 10. Malaysia *Source: http://www.sourcingline.com/top-outsourcing-countries Is Outsourcing Exploitation or Chance for Developing Countries? Anıl Sural 8
  9. 9. There are many positive and negative aspects of outsourcing. When we look at the other side, there are negative impacts for workers. Workers are disenfranchisement and lack of good working conditions. Moreover, their gain would highly decrease. Businesses outsource their core competencies towards the activities of the remaining cost of the cost savings provided was asked. They have reached their goals in providing only save money. Improving the quality of product or service, entering the larger markets, and increasing the number of customers of other businesses are targets. Is Outsourcing Exploitation or Chance for Developing Countries? Anıl Sural 9
  10. 10. Outsourcing from China Side Is Outsourcing Exploitation or Chance for Developing Countries? Anıl Sural 10
  11. 11. The world's second largest economy is Chinese economy. Argued that the protection of the country's 2020 growth of 7.5 per cent. In addition, large fluctuations in economic performance for the lack of maintenance of stable economic growth and inflation must be kept under control with the prevention and invisible risks. Recently, China has witnessed an intense debate about whether there can be an alternative to the United States or not. In the unipolar world, China is discussed in whether there will be a second pole. Is Outsourcing Exploitation or Chance for Developing Countries? Anıl Sural 11
  12. 12. Multinational corporations are the dominant providers in China's high-end market. In addition, due to China's abundant low-cost human capital and infrastructure, some have set up their global service-outsourcing bases here to provide support and services for other countries. Multi-national companies have invested in China which has positive impact on this country. It increased productivity and social security on labor market. China's economy has provided a high added value. In addition these improve cities’ values. China learns now how produce, supply chain and logistics management. Is Outsourcing Exploitation or Chance for Developing Countries? Anıl Sural 12
  13. 13. The Chinese government views an outsourcing arrangement as a pioneer in attracting demand and the preferred mode to provide access to technologies into the Chinese market. For foreign companies, like ‘’price''; economic platform that accelerates the introduction of new technologies, large internal funds and investment and a means to accelerate their based on the state of the economy and the transition to a mixed effect '' benchmark'' to direct resources into strategic industry guidance are important. Is Outsourcing Exploitation or Chance for Developing Countries? Anıl Sural 13
  14. 14. Outsourcing Workers Conditions in China Is Outsourcing Exploitation or Chance for Developing Countries? Anıl Sural 14
  15. 15. High population is the one of the biggest problem for China, as well as being a major source of economic power. The participation of about seventy million people in the next ten years, the labor force is envisaged. One of the biggest obstacles standing in the way of China's development is to meet the needs of thispopulation and to cope with lack of infrastructure. Heavy investments are made in order to remedy this shortcoming. Is Outsourcing Exploitation or Chance for Developing Countries? Anıl Sural 15
  16. 16. Apple originally from California, United States and they created or supported nearly 600,000 jobs for U.S. They do not manufacture in United States. They use global outsourcing and Foxconn manufacture for Apple in China. And in 2012, Apple is an independent consulting firm to appoint an audit for Foxconn working conditions. These workers make about 51 cents an hour. It should be noted that Apple's Foxconn workers are used to work longer hours, as much as 70 hours a week. Apple mandated that the maximum overtime should be 20 hours a week, so Foxconn workers now only work 60 hours a week. Is Outsourcing Exploitation or Chance for Developing Countries? Anıl Sural 16
  17. 17. Also in dormitory condition, many people live in the one room. Most of the workers were forced to work 12 hours a day standing, lack of payment for overtime, preventive measures are not taken at the beginning of the business emerged. Foxconn hired child employment and 14-year-old youth was run as an intern on the factory. The minimum age limit of 16 in the factory was due to Chinese labor law. 22 employees committed suicide because of working condition. When they hire people, they will sign a contract and it is written: I will not commit suicide. Is Outsourcing Exploitation or Chance for Developing Countries? Anıl Sural 17
  18. 18. How does United States see outsourcing? Is Outsourcing Exploitation or Chance for Developing Countries? Anıl Sural 18
  19. 19. Dynamic and powerful determinant of the economic structure of the U.S. economy is the functioning of the market actors. United States of America is the world's largest economy and the most important industrial center. 70% of production and services are provided by the private sector. US companies affect US Economy directly and they have quite good impact. Actually US firms have an impact all over the world economy. US are the world's largest energy producer, consumer and importer. They have rich natural resources and they fired skilled labor. Is Outsourcing Exploitation or Chance for Developing Countries? Anıl Sural 19
  20. 20. U.S. firms use global outsourcing for manufacturing activities. Because they want to decrease cost, especially labor cost. Globalization has affected all over the world and developed countries want to use developing countries’ cheap labor, raw materials, energy, and so on. They have begun to take advantage of more opportunities. Multinational US companies use developing countries for production in due to lower costs by performing these countries managed to establish a more efficient value chains. Is Outsourcing Exploitation or Chance for Developing Countries? Anıl Sural 20
  21. 21. Reasons for the production of the iPhone in China. A very large amount of glass used in the display can be combined together and the fact that China is coming soon. Apple founder and former CEO Steve Jobs, the iPhone, before placing the product on the market to have a glass screen, and asked to be produced in large quantities within six weeks. This can only be achieved by China. Another reason why Apple chose China for production is flexibility, size and efficiency. Earlier time Chinese manufacturer with a vast experience in manufacturing electronic controls and the tight bandwidth limitations in the United States were more flexible and efficient. Is Outsourcing Exploitation or Chance for Developing Countries? Anıl Sural 21
  22. 22. Insourcing American Jobs Is Outsourcing Exploitation or Chance for Developing Countries? Anıl Sural 22
  23. 23. President Obama Hosts "Insourcing American Jobs" Forum at the White House in 2012. The purpose of the forum is the opportunity to produce more cheaply abroad to "outsource" the U.S. production has been re-take the country. United States Global firms outsource for 3 E. These are efficiency, effectiveness and economy. This 3 E perspective: companies are inefficient or if outsourcing is a more efficient all the work to make this resource it is outsourcing. Is Outsourcing Exploitation or Chance for Developing Countries? Anıl Sural 23
  24. 24. United States of America president is Barack Obama had an important speech on January 07, 2012. This message from Obama: ‘’ I don’t want America to be a nation that’s primarily known for financial speculation and racking up debt buying stuff from other nations. I want us to be known for making and selling products all over the world stamped with three proud words: “Made in America.” And we can make that happen. I don’t want the next generation of manufacturing jobs taking root in countries like China or Germany. I want them taking root in places like Michigan and Ohio and Virginia and North Carolina. And that’s a race that America can win. ‘’ Is Outsourcing Exploitation or Chance for Developing Countries? Anıl Sural 24
  25. 25. Outsourcing and Global Outsourcing are different two terms. One of them is domestic. US companies can use outsourcing for their firm and they use labor force for decreasing labor cost and want professional skill worker. It does not decrease or increase domestic market so it does not affect unemployment rate. 120,000 employees work for Apple in China Is Outsourcing Exploitation or Chance for Developing Countries? Anıl Sural 25
  26. 26. Conclusion Is Outsourcing Exploitation or Chance for Developing Countries? Anıl Sural 26
  27. 27. When we focus on Apple case, first of all, we can see two important countries. These are world’s largest economy. One of them is United States and other side is a candidate for biggest economy: People's Republic of China. United States does not want to produce. They see manufacturing like errand. China has potential for manufacturing and their labor costs are cheaper than U.S. China is glad to be outsource for other companies. Because it is opportunity for China. They do not have information technology for generating new knowledge. China learns manufacturing, supplying chain, knowing how, logistics etc. Is Outsourcing Exploitation or Chance for Developing Countries? Anıl Sural 27
  28. 28. China has capacity and force for produce and earns money from U.S. On the other hand, problems are starting for people. Americans loss their job and their unemployment rate increase. They cannot find job. Chinese people do not have problem for finding a job but they earn less money and their working conditions are hard. Third parties are companies. Entrepreneurs are happy both countries. American businessmen make more profit than Chinese entrepreneurs and Chinese businessmen work for global multinational companies and earn money. Is Outsourcing Exploitation or Chance for Developing Countries? Anıl Sural 28
  29. 29. Anıl Sural anilsural@gmail.com slideshare.net/anilsural linkedin.com/in/anilsural twitter.com/anilsural Is Outsourcing Exploitation or Chance for Developing Countries? Anıl Sural 29

×