Globalization and its historical background
Discuss about the Domestic Outsourcing and Productivity Services.
In the framework of the modern day business community the concept of globalization is seen as a major boon which has considerably modified the way the various business houses operate their business (Larsen, Manning and Pedersen 2013). Prior to the introduction of the process of globalization the various business houses use to operate their business following the traditional precepts and frameworks of business (Larsen, Manning and Pedersen 2013). Therefore, the introduction of the process of globalization is often seen as a factor which has impacted the prospects of the various business houses in a positive manner (Honeycutt Jr, Magnini and Thelen 2012). Furthermore, the framework of globalization has been in practice since the dawn of human civilization and the various civilizations in the traditional times use to take the help of this particular process to conduct trade with their neighboring civilizations. However, the process of globalization gained special with the introduction of the telegraph system and also with the innovation of the steamboats (Honeycutt Jr, Magnini and Thelen 2012). Many scholars are of the opinion that the process of globalization is “the trend of increasing interaction between people or companies on a worldwide scale due to advances in transportation and communication technology, nominally beginning with the steamship and the telegraph in the early to mid-1800s” (Gregory, Beck and Keil 2013). Moreover, the “International Monetary Fund (IMF)” in 2000 gave four basic characteristics of globalization, namely, trade as well as transactions, investments, transfer of knowledge and increasing migration of people from one place to another (Gregory, Beck and Keil 2013). All these four factors have emerged as the basic precepts of the corporate world and their international business in the current day context and this particular fact explains the growing emphasis of the various business houses of the present times (Gregory, Beck and Keil 2013). Thus, the major business houses of the present times taking the help of this particular process are increasing establishing their business in the other nations of the world (Wirtz, Tuzovic and Ehret 2015). In a way it can be said that the process of globalization has made the entire world of business a global village where all the business houses from the diverse parts of the world can conduct their business (Wirtz, Tuzovic and Ehret 2015). This essay will discuss about the concept of globalization and its related processes like outsourcing and offshoring. The essay will also discuss about the way the process of outsourcing as well as offshoring has impacted the concept of globalization.
Outsourcing and offshoring and their importance
Outsourcing is defined as the process by means of which a particular business house contracts its internal work like the manufacture of goods or services, the handling of customer support and others to the different nations of the world (Charles Jr, Schmidheiny and Watts 2017). In other words the process of outsourcing can be said to involve “the contracting out of a business process (e.g. payroll processing, claims processing) and operational, and/or non-core functions (e.g. manufacturing, facility management, call center support) to another party (see also business process outsourcing)” (Charles Jr, Schmidheiny and Watts 2017). Another important process associated with the concept of outsourcing is the concept of offshoring. This particular method entails with itself the relocation or the transfer of the business activities of a particular house from particular nation to another (Charles Jr, Schmidheiny and Watts 2017). The concept of offshoring is defined as the “relocation of a business process from one country to another—typically an operational process, such as manufacturing, or supporting processes, such as accounting” (Wirtz, Tuzovic and Ehret 2015). Furthermore, it is seen that the various state governments also take the help of this particular process however in the modern world this particular process is generally employed to refer to the outsourcing of the administrative as well as the technical processes related to a particular business house (Wirtz, Tuzovic and Ehret 2015). Thus, it would be apt to say these two concepts are generally seen as entities which have emerged out of the umbrella of globalization and is increasingly being used by the various business houses of the present “not only to further enhance their prospects in the contemporary business world but also to bring about their overall growth as well as development” (Nassimbeni, Sartor and Dus 2012). It is a reflection of this particular fact that the various business houses of the present times are increasingly taking the help of these three concepts, namely, globalization, outsourcing and offshoring for the process of their business (Nassimbeni, Sartor and Dus 2012).
The role of the diverse international managers as well as leaders in the present times has undergone a significant modification in the present day context on the score of the advent of offshoring, globalization, outsourcing and other methods (Honeycutt Jr, Magnini and Thelen 2012). The managers as well as the leaders within the framework of the various business houses in the contemporary business world are not only imbued with the job of the management of the organization concerned and the diverse employees related to them (Honeycutt Jr, Magnini and Thelen 2012). The international managers in the present day context are also required to formulate as well as devise strategies are likely to further enhance the prospects of the concerned business house within the framework of the international business (Arlbjørn and Mikkelsen 2014). Furthermore, the various business houses following the various precepts of the concept of globalization expand into the other nations of the world however it is one of the primary roles of the managers to decide the strategies as well as the policies which the organization under consideration is likely to follow in this particular context (Arlbjørn and Mikkelsen 2014). It is a reflection of this particular fact that the various managers of the business houses of the contemporary business world are taking the help of the help of the various kinds of staffing processes like polycentric, geocentric and ethnocentric staffing methods (Gregory, Beck and Keil 2013). Furthermore, the rise of various kinds of theories related to the concept of globalization like “World-system theory”, “Theory of global capitalism”, “The Network Society Theory” and others also have a considerable impact on the decisions made by the various managers as well as business leaders in the wake of globalization (Gregory, Beck and Keil 2013). Many scholars are of the opinion that the primary focus of the various business houses of the present times is on the concept of the increase of the net yearly profit gained by them and this particular fact acts as one of the key motivating elements for the various business houses to pursue the path of internationalization (Gregory, Beck and Keil 2013). However, it is commonly seen that sometimes the various business houses in a bid to expand their business and also to reach out to a larger number of customers expands their business so much that they are unable to regulate as well as monitor the various aspects of their business (Gray et al. 2013). Moreover, many experts are of the opinion that it is not possible for one particular manager or a leader to manage all the diverse aspects of a business house (Gray et al. 2013). Thus, in this particular context the concepts of outsourcing as well as offshoring gains prominence as they help the business houses to relocate or transfer a part of their business operations to the other areas which they would be effectively managed by other people and business houses (Honeycutt Jr, Magnini and Thelen 2012). Moreover, this particular action have another significance as well since it helps the various managers to effectively focus on the key areas of the business which requires his or her attention the most for the betterment of the business house (Honeycutt Jr, Magnini and Thelen 2012). Therefore, it can be said that the concepts of offshoring as well as outsourcing are not just a choice for the various business houses but has become an important necessity of the contemporary business world (Honeycutt Jr, Magnini and Thelen 2012).
Impact of outsourcing and offshoring on globalization
“Atlassian Corporation Plc” founded by “Mike Cannon-Brookes and Scott Farquhar” in 2006 is one of the leading software companies of the nation of Australia (Atlassian 2018). The business house is known for the high quality of software which it delivers to the various customers from all over the world (Atlassian 2018). The business house is an “Australian enterprise software company that develops products for software developers, project managers, and content management” (Atlassian 2018). The fame of the business house under discussion here depends of “issue tracking software” called by the Jira and also for “Confluence”, a wiki based product (Atlassian 2018). The company has a customer base of more than 60,000 customers from different parts of the world and it has an annual turnover of “$619.9 million” for 2017 (Atlassian 2018). Some of the most important customers of the business house under consideration here are “Tesla, SpaceX, Spotify and every Ivy League university” (Forbes.com. 2018). Furthermore, the business house under discussion here has undertaken several acquisitions in the present times and following this particular policy the business house acquired “Trello for $425 million and Cannon-Brookes for $820 million” (Forbes.com. 2018). The merger as well as acquisition policy followed by the business house under discussion has worked out beautifully for the business house as it has been able to design software like “Crucible, FishEye, Bamboo, and Clover” using the technology of the companies which they had acquired (Atlassian 2018). Moreover, the business house under discussion here is operational in some of the most famous countries of the world like USA, Manila, Netherland, Japan, Philippines and others (Atlassian 2018).
The business house “Atlassian Corporation Plc” is known for its outsourcing as well as offshoring strategies which it has adopted in the recent times in order to cope with the significant amount of work pressure which the organization faces on the score of the “wide range of services which it provides to the customers from the different parts of the world” (Charles Jr, Schmidheiny and Watts 2017). The business house under consideration here has its business centers in different parts of the world like “Amsterdam in the Netherlands; Austin, San Francisco, and Mountain View, California, in the United States; Manila in the Philippines; Yokohama in Japan, and Sydney in Australia” (Atlassian 2018). An interesting fact to note about the various business houses of the nation of Australia is the fact that the various business houses of the nation of Australia spent around “$26 million in 2018 for the process of outsourcing as well as offshoring and this cost is likely to increase to $37.7 million by the year 2022” and the business house under discussion here is a major contributor to this particular investment (Forbes.com. 2018).
Role of international managers in outsourcing and offshoring
The processes of outsourcing as well as offshoring render various benefits to the business houses like “Atlassian Corporation Plc” and others which take the help of these methods. Some of the common benefits of the use of these methods for the various business houses which take the help of these are firstly, the methods of outsourcing as well as offshoring are very cost effective and they considerably reduce the operational cost of the various business houses (Charles Jr, Schmidheiny and Watts 2017). Moreover, it is generally seen that these business houses outsourcing as well as offshoring their business processes to the various developing nations of the world whose economic framework is not that strong and therefore the salary or the amount of capital which it spends on the employees in these countries is considerably lower in comparison to the amount of salary or wage which it would have to pay had it been getting the same kind of work done in the nation of Australia (Charles Jr, Schmidheiny and Watts 2017). Thus, the nation of Ukraine has emerged as one of the most preferred outsourcing as well as offshoring destination of the various business houses of the nation of Australia (Charles Jr, Schmidheiny and Watts 2017). Secondly, the process of outsourcing as well as offshoring is often opted by the various business houses of the world in order to overcome the factor of the lack of technological advancements of the nation in which they are based (Nassimbeni, Sartor and Dus 2012). The nation of Australia belongs to the league of the developed nations of the world however it is significant to note that the technological growth rate of the nation is very slow (Nassimbeni, Sartor and Dus 2012). Therefore, it is seen that in order to avail the technological advancements of the other first world countries like USA, Netherland and others the business house under discussion here has outsourced its business process to these nations (Nassimbeni, Sartor and Dus 2012). Thirdly, another major advantage of the process of outsourcing as well as offshoring is that these processes enable the various business houses to take the help of the experts and the skilled professionals who belong to the nation in which these business houses are outsourcing or offshoring (Wirtz, Tuzovic and Ehret 2015). Many scholars are of the opinion that these experts and the skilled professionals contribute in a significant manner towards the business process of the organization which is outsourcing or offshoring in these countries (Wirtz, Tuzovic and Ehret 2015). Fourthly, a major reason for the use of the policies of outsourcing and offshoring by the various business houses of the world is that it helps in the better management of the concerned business house (Cavusgil et al. 2014). The transfer of the operation of a few sections of the business to the other countries or regions significantly reduces the work pressure from the management team of the organization and therefore the managers as well as the management teams are able to focus on the aspects of the business which require their attention the most (Cavusgil et al. 2014). Furthermore, many people are of the opinion that this not only reduces the level of work load of the management team but also the employees related to the business house (Cavusgil et al. 2014). Fifthly, it is commonly seen that the processes of outsourcing as well as offshoring helps in the expansion of the business market of the concerned business house in a significant manner (Ekberg and Lange 2014). For example, the business house “Atlassian Corporation Plc” has its outscoring centers in the nations of USA, Netherland, Japan and others and by virtue of this particular fact the business house under discussion here has been able to significantly capture the business market of these countries as well. Thus, it is seen that the various managers as well as the leaders related to the business houses take the help of these concepts to further the interests of the business houses to which they are related (Ekberg and Lange 2014).
Analysis of Atlassian Corporation Plc’s outsourcing and offshoring strategies
The processes of outsourcing and offshoring, though important ones within the framework of globalization entails with itself some negative connotations as well which the business houses like “Atlassian Corporation Plc” and others should take into consideration. The primary negative aspect of these processes is that the majority of the business houses complain these processes often reduce the effective control which the business houses concerned would have been able to exert had the outsourcing centers being in their native nation (Krugman 2017). Furthermore, it is generally seen that the quality of the products or the services manufactured by these outsourcing as well as offshoring centers is often below the standard of the quality parameter set in by the business house of the native nation (Krugman 2017). Moreover, it is commonly seen that the various business houses opt for the developing nations of the world in order to reduce the operational cost therefore these centers will be much affected by the political, social, economical, technological and other important factors which affect the business process of that particular country (Pedersen et al. 2013).
The business house “Atlassian Corporation Plc” is not the only one which takes the help of the concept of globalization and its related precepts like outsourcing, offshoring and others (Pedersen et al. 2013). In the contemporary business world it is generally seen that most of the business houses take the help of these concepts because of the various benefits which they provide to the business organizations (Mitchell 2015). Furthermore, in addition to the benefits which they provide to the specific business organizations which opt for the process of globalization the major benefit of this particular process is the fact that the process of globalization has transformed the entire world into a global village which has significantly transformed the business world of the present times (Mitchell 2015). Thus, it is seen that the various business houses are taking the help of this particular concept to reach out to a much larger customer and also for a purpose of production of surplus amount of products. These surplus amount of goods and services have not only enhanced the profit margin of the concerned business houses but has also increased the number of options or the choices which the customers have in the present times (Gray et al. 2013). Therefore, it would be apt to say that the process of globalization has not only contributed in a positive manner towards the growth of the various business houses but has also widened the choices which the customers get in the present times.
Conclusion
To conclude, the process of globalization is probably one of the most important factors which have significantly changed the course of the world business in the present times. As a matter of fact the process of globalization has transformed the entire world into a global village where the business houses from the different can have effective business relations with the other business houses from the different parts of the world. A significant aspect of this particular aspect is that it has not only positively impacted the interests of the various business houses of the present times but has also widened the choices as well as the options which are available to the customers. Therefore, the various business managers as well as leaders often resort to the process of globalization and the various precepts of it to further the interests of their business house.
References
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