Outsourcing Study Update:

University Center Studies the Possible Benefits to Outsourcing

Training and Case Studies Available to Interested Businesses, Educators

September 10, 2007

By Pam McLaren

What does outsourcing mean for regional businesses?

If you ask business owners, you’ll get a wide range of opinions, from it saves money and creates efficiency to it sends jobs out of this country.

Thanks to a two-year, $148,769 U.S. Department of Education grant, Cal State Fullerton’s Center for the Study of Emerging Markets has not only conducted a survey to find out what business owners think, but has developed case studies and training modules to assist businesses in learning more about the advantage and disadvantages of outsourcing, as well as how to use it to their company’s advantage.

“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.”

Greco points to programs in Japan and India as examples of two different types of outsourcing. India favors a more traditional form, he explained, with American companies turning to companies in India to serve as call centers for services such as 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 noted that of the five case studies posted on the center’s website, http://www.thecsem.org/casestudy.html, four of the companies have used outsourcing successfully. The fifth, he noted, operates in a highly skilled technical field where extensive training would be necessary for outsourcing to be beneficial.

“The truth of the matter is that one shoe doesn’t fit all. Outsourcing can make some companies more efficient, but not all,” Greco said. “Our goal is to provide opportunities for businesses to find out more about outsourcing and to provide training if they are interested in trying it.

“We have developed for local companies a free online training that provides a ready-to-outsource assessment for firms who are considering outsourcing,” added Greco. “For those who already outsource, it evaluates the effectiveness of the program. The training also tells companies where the newest outsourcing locations will be.”

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.