What is outsourcing?


               Outsourcing refers to when a company contracts with another company to perform services that could otherwise be done by the companies own employees.




                 Offshoring is the transfer of a organizational function or business segment to another country. Outsourcing and offshoring go hand in hand together. Thousands of jobs are being outsourced to developing countries where wages are not nearly as high as that of industralized countries.





PepsiCo and Outsourcing

                 In the past, it was typically thought that only jobs that require little skill, such as factory posistions, were outsourced to foriegn countries. However, over the past few years blue collar jobs, such as information technology and human resources posistions, have been outsourced to countries such as India, where people know how to speak english and have the training to do these types of jobs.

                -PepsiCo is currently contracted with a company called Endevour Info Consulting Services, which operates out of Bangalore, India. The company deals with data processing, claims processing, contact center, customer care, benefit administration services, etc.

                - PepsiCo recently signed a ten year agreement with Hewitt Associates, a global human resources firm. Hewitt will be providing HR BPO for the US plus 67 other countries. 

                - Manish Gupta, Director-IT of Pepsi Foods in 2006, stated "all operating and regular maintenance jobs are outsourced at Pepsi, while strategic, tactical, project/program management etc are done in-house. "

                - The Hindu Business Line reported that Pepsi has a $100-$300 million outsourcing deal availiable to contract with Indian vendors. However, the article did not state what services Pepsi was looking for.

                 - PepsiCo also recently outsourced a lot of their IT posistions. Centers were opened Mexico, Singapore, and in the UK. The contract was signed with a company called Infosys.



Benefits for the company

                   - Cost Savings
                   - Speeds up production time
                   - Saves the company time because no hiring process is necessary


Disadvantages for Society

         Loss of Jobs. When a company decides to outsource, especailly when it involves offshoring, a decrease in local jobs is seen. Jobs are either given to a member of a company who is already employed or to a person in a foreign country.  Yes, outsourcing saves the company money but it hurts the countries economy and adds to unemployment rates. Despite all of this, outsourcing is very popular within corporations today and even within smaller businesses. While outsourcing saves these companies quite a bit of money, some things, such as helping your countries economy, should be worth paying extra money for.