Niyamath Parveez

The news of job losses is hardly a surprising story these days with so many firms having to cut back on their labor costs or even go release all of their staff. Such is the scale of the credit crunch that is blighting the world at the moment, no one is really safe with respect to their job but there are still companies where job losses make people wince. The banking industry has clearly been affected heavily and even though there have been a number of redundancies in the industry, there are still more expected to come. One of the recent announcements has come from Lloyds, who have said that over 2,000 jobs are being shed.

Part of the reason that a company like Lloyds can make this sort of decision and still keep trading successfully is due to the importance of outsourcing. There seems to be a difference of opinion these days over whether outsourcing is still popular and improving. Some say yes, some say no and it’s all a matter of what you are basing your expectations on. In the current climate, it is probably unlikely that any company or industry will have true success but the outsourcing industry appears to be reacting okay to the current slump and will likely be okay in the long run. However, there are some political pressures that are impacting on the ability of some firms and companies to offshore outsource. When jobs are being lost left, right and centre, it can be a PR disaster for some companies to offshore their work to a different country. They would be viewed as monsters by the public and it could lead to a massive drop in sales, which no organization needs at this moment in time. Therefore, some companies are finding it makes sense to place some clauses in their outsourcing contracts to ensure the public doesn’t think too badly of them.

The British government has long had outsourcing contracts which state that the jobs must be retained in the United Kingdom, which clearly negates some of the benefits that will arise from using outsourcing. As other countries have standard of living and minimum wage levels that are far lower than their UK equivalent, it stands to reason that it will be possible to find lower wage levels in other countries. Not being able to send tehse jobs abroad will make it harder for an outsourcing supplier to competitively tender for jobs but many are finding a way around it.

It has been noted recently that some Governmental departments and Lloyds Banking Group have had an increasing number of workers being shipped in to work with them as outsourcing staff from the company Capgemini. According to notorious right wing English newspaper the Daily Mail, these workers are being shipped over from India in an attempt to undercut the UK workers and the paper thinks this is a disgrace given that the UK unemployment levels have topped the 2m mark. Unsurprisingly, there has been no official comment made about this situation so it is unclear whether it is true or not but if so, it could well spark a dangerous precedent with regards the future of outsourcing.

There is a traditional view of outsourcing which means that many firms consider it good for answering telephone calls or assisting with office and administration work but outsourcing can be of great benefit in all industries and business models. With the current financial situation placing a greater need to be financially robust, more and more firms are considering outsourcing and there may be one or two surprises in store when examining the different ways of outsourcing.

The construction of the automobile has came a long way since the first ever care but the greatest ever evolution came when Henry T Ford introduced the automation construction of an automobile and this process is still prosperous today. The use of machines plays a massive role in producing a car today but one of the world’s top names in the vehicle business may not be the great manufacturer that it used to be.

Porsche is easily one of the best loved makers of automobiles, being founded in 1931 and its reputation is mainly found upon being one of the most prestigious brands available. This sort of traditional and branding does not come overnight nor is taken lightly and Porsche are fiercely proud of how they are viewed by the market place. There have been many notable changes and developments in the automobile production elements but Porsche have adapted and remained a market leader.

One of the major shifts in the industry came in the 1970s and 80s when the automobile industry learned a lot from the Japanese manufacturers, notably Toyota, and the concept of Just-In-Time inventory control quickly grew popular. This is where suppliers would maintain stock until it was required, allowing the ultimate firm to lower their costs with regards to storage. This was a turning point for many car manufacturers in receiving larger profits but Porsche have managed to go one step further.

It was back in 1997 when the demand for the 911 vehicle was putting great strain on Porsche’s production capabilities that the firm took the decision to completely outsource the production of their Boxster range, with the privilege going to Valmet from Finland. It is said in some quarters that this alliance has led to an increase in the overall quality of the finished Porsche vehicle but all parties are silent on this topic. However, it does go to show that even a firm with such a prestigious name and heritage as Porsche can find improvements from utilizing external partners and outsourcing the vast majority of their work. For the Boxster and the Cayman, Porsche have been playing the role of designer whilst the Finnish firm brings their designs to life.

When outsourcing is being discussed, it is common to consider the Far East and emerging markets as the location for outsourcing but the need for quality as well as an affordable price has sown that there is the potential for outsourcing in all avenues and areas. The current economic trend means that all firms, not only Porsche, are having to revaluate their current partnerships and production techniques which may mean that there may be a shift away from the current methods but there is no doubt that there is a need for quality outsourcing and not just low cost outsourcing.

If your brand and image is based upon a reputation that has been built up over a number of decades, choosing the wrong outsource partner or making a decision based purely on cost may well see that image destroyed in no time at all.