CSUF Center for the Study of Emerging Markets Explores Business Outsourcing
Project "Confronting Outsourcing by Your Competition" researches how outsourcing works and why so many companies are outsourcing goods and services as well as how it affects the local Orange County economy

December 18, 2006 :: No. 101

Cal State Fullerton’s Center for the Study of Emerging Markets is conducting a study on outsourcing to expand on what the practice means for area businesses.

The project, “Confronting Outsourcing by Your Competition,” is supported by the U.S. Department of Education, which awarded $71,747 as first-year funding of a two-year grant.
          
“Foreign outsourcing has emerged as one of the most compelling, important and misunderstood issues in business today,” said Joseph Greco, center director. “Fears and lack of information about foreign outsourcing affect the future expansion of American international trade, especially in Southern California. Business people, as well as students and teachers, are concerned.”
          
Greco points to programs in Japan and India as examples of two different types of outsourcing. India is part of a more traditional form, he explained, with American companies turning to companies in India to serve as call centers for technical support and medical information. In Nagoya, Japan, meanwhile, reverse outsourcing is succeeding, noted Greco.
          
“Toyota/Lexus outsources lower-end jobs, while insourcing higher-end jobs,” said Greco. Both cases are examples of successful models, he added. “What are they doing that can be done here?”
          
Greco said that the center will conduct an annual survey of Southern California firms, especially members of the American Electronics Association of Orange County, to establish what its members know about outsourcing, how many companies are outsourcing and why. It will expand on a center survey conducted in 2004.
          
“The perception that business leaders and others have about outsourcing is tied to their lack of information about what it is,” said Greco, noting that the Center for the Study of Emerging Markets will be developing materials on outsourcing, as well as making it available online, so that members of the business community, as well as university students and faculty members have access to the information.
          
“Students want to know how outsourcing works and why so many companies are outsourcing goods and services. They also want to know if it is good or bad for the United States and how it affects the local Orange County economy and their future jobs and careers,” said Greco. “Because of a lack of clear and objective data, it’s a challenge to answer student questions on this matter.
          
“Similarly, members of the high-tech business community want to know where to outsource, how to compete effectively, whether it hurts their industry and how to find local alternatives. This study, and the data we develop, will address those concerns,” said Greco.
          
The center also is partnering with universities in India to survey businesses in that country. That survey will seek to determine the various elements contributing to what makes those firms attractive for outsourcing.
          
Study results are expected to be released in January during a gathering of the American Electronics Association. Findings also will be posted on the Center for the Study of Emerging Markets website.
          
The Center for the Study of Emerging Markets, part of the university’s College of Business and Economics, was established to promote the flow of global information and technology between the academic and business communities. It serves as a conduit to facilitate the interchange of ideas and inquiries among students, academics and businesses.

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