Outsourcing of General Electric
Introduction
The outsourcing is also the subcontracting or externalizing the non-core activities for the free up cash, facilities, and personnel time where the firms are holding the competitive advantage. The firms has the strengths for the other cases of the contract-out, legal, data processing, marketing and the overall payroll accounting or to the other aspects of the concentrated business in doing its best and reducing the average units cost. The outsourcing is commonly known as the reengineering or downsizing or contracting out (Business Dictionary, 2008).
Thus, it can also be defined as the process of the delegates of the company for the some of its processes and operation to the third party. It is the contracting transaction through the company purchases the services from the other one while keeping the ultimate ownership for its responsibility in the underlying processes. Therefore, the clients are providing their instructions and are authorize in providing the operations to redesign the basic process for ensuring the efficiency benefits or the greater cost. The outsourcing then is existing practice as the contract programming, the bureau services, and the project management which have been outsourced for the long time. Therefore, outsourcing defines as the greater level of handling over the ownership of the managerial control. Most of the companies are all turning to the outside structures of their organization so that they can save much money and can make the use of the skilled workers. The company can outsource its IT management due to the cheaper contract on the third party as building its own house (Cyber Future, 2008).
This practice had been applied by the General Electric, Inc. (GE) to the different part of world and for the past last century, it had been established for more than 100 countries. The company manages and started to work on its business to the international scene.
Company Profile
The General Electric (GE) is the diversified technology, financial services company, and media. The company has the services and products that ranges from the engine aircraft, water processing, power generation, and the security of technology for the medical imaging, consumer financing, and business includes also the industrial products and the media contents that serves the customers for more that 100 countries. The company subdivided its organization into four segments as the GE energy, the GE Technology Infrastructure, GE Capital and Corporate Treasury, and the NBC Universal. The GE Technology Infrastructures had been engaged in the building of the transportation, healthcare and the technology infrastructures. The business of this segment is primarily the provision of the aviation, healthcare, enterprise and transportation solution. The GE capital is offering the products and services that enable and aimed the commercial businesses for the consumers worldwide. The services of the company includes the operating loans, operating loans, management programs, fleet management, insurance, home loans and others. The company aggregates all of its financial services for the business that includes the commercial finance, industry vertical, and GE money. GE Energy Infrastructures is engaged on the implementation, development, and improvement of the products and technologies which can harness the resources and it includes the oil, gas, and water. The corporate treasury and the NDB universal engaged for the globalization of the company as well as diversification and develop, produced, and marketing film for the international audience (Reuters, 2008).
The Impact of Outsourcing to GE
Through the further observation of outsourcing process to the trends of industry in the firm can provide the offering of service into the functional areas and the efficiency of integration that will undoubtedly motivate firms of the clients into the single provider of multifunction. Nevertheless, the organizational client might be vulnerable in taking over and can lead to the outsource provider for the corporations that happened by GE in the year 1980’s which outsourced the microwave to the small firm as the Samsung in Korea. This has resulted to the production of Samsung’s microwaves which are less expensive yet has the higher quality as compared in US and after years the company shifted the production to Korea. This had resulted to all domestic microwaves production and the Samsung became the largest manufacturer of microwave in the world (Schniederjans, 2008, p. 15). There are still many impacts of outsourcing to the status of GE in many terms.
The Impact of Outsourcing to GE – India
The General Electric (GE) is considered to be the leading proponents in the global outsourcing same in the area of the knowledge based services and the manufactured products. The company pushes its production in India and became his important market which can generate about billion every year. In those outsourcing years, the company realized that India was having the specific competencies in mathematics and science as well as establishing the major research in the campus of Bangalore in leveraging the abundance of the engineers. The company also develops the successful operation of world-class outsourcing in India that employs more than 22,000 people and operations that has the spans of call center, software development, back-office processing operations, and the product design for the Research and Development. In this outsourced movement, it made the company to be the largest foreign multinational company enterprise that engaged in the off shoring of the knowledge-based services and products in India. The company designed the virtual plastics plants in India that are based on the real plants in Spain where the Indian engineers and scientist can monitor the real time operation of Spain which can offer to the advices by the Spanish counterparts in order to increase their efficiency. Since, the company has the wide ranging nature when it comes to the knowledge based and emphasizes the operation of de-novo and not to rely on the vendors of third party. It was about half of the software of GE had been developed in India and the function of network management for the GE medical systems are all largely controlled by India. The company then has million of Bangalore that works on the projects which can feed the business (13 major businesses) that are subordinated by the GE umbrella. The process of de novo was the most sufficient choice in the GE for many reasons. The first reason is the fact that the operations in India is involving the crucial knowledge function in the development of the non-standard monitoring and to the global products design as well as development. The country also has the real time monitoring systems and critical network management. The functions are all been huge components of proprietary which has the important competitive advantage and implications and hence required to be internalize. The second reason for using the de novo is its history to India; this implies that the company is having much more knowledge on the managing of the Indian workforce and to adapt the local culture as well as navigation of the regulations of local government. The third one is the used on the blend of employees for the operations in US that are typically the Indian expatriates who had been relocated in India and can be helpful on the hallmark culture of GE as well as the practices in its management for the new employees. In the year 2004, the company decided to sell the majority of its stake for about 60% in the outsourcing arm in India and the GE capital services for the 0 million in the two firms of private equity. The reason behind the selling of the stake is unleashing the new entrepreneurial spirit for the company and pursuing the new business outside the company’s firms (Inkpen, A and Ramaswamy, K, 2006, p. 144).
The Impact of Outsourcing to GE – Mexico
The GE had also experienced to diverse its products in Mexico for the past 108 years and the presence are for the several plants. It also made the expansion in the production of the employments and plants for about 30,000 people which are commo0nly responsible in the electric motors, capacitors, and control devices as well as lighting products. In Mexico, it is the largest operations of the company outside US. Through making partners to the government of Mexico, the company acquired the target 6% on its production growth and the businesses were all winners. The example of which is the real estate of GE that recorded an acquisition of more than billion for its financing for Mexico only and became the top real estate lender in entire Mexico. The outsourcing in Mexico also had incomes greater than ,000 and for the population of 100 million that attracts the company more which results to the growth of the financial services. In this regard, the company is open for the challenges in the large competitors yet there are macroeconomic factors that need to improve which was less conducive. There turnover and wages were all high which includes the constructions, the land, water and electricity as compared to the other country. These factors are less conducive in the operations to Mexico and the country is not ideal for the FDI because of the vulnerability of currency fluctuation despite of dropping of inflation rate. Thus, the CEO of GE Mexico was cautiously optimistic for the potential of the country yet recognizing the outsourcing in China. The company was negatively impacted by the economic downturn of Mexico and suffered for almost 2 years due to the global slowdown (Vietor and Veytsman, 2007).
The Impact of Outsourcing to GE – China
In the year 1910, GE invades China by its production of light bulb. After almost 100 years, the presence of the company has entails investment of .5 billion with the employment of greater than 12,000 and joint ventures of more than a dozen. The ventures of the company include the industries of high-technology including the plastic, lighting and medical system products. The country is a synergy of the customer and the area of electronics, transportations, and healthcare products. The example of the successful sectors of GE China is the tooling, small appliances and the metalwork and has almost 4,000 employees. The R&D, distribution and sourcing in China are all substantial. GE in China made its success that lead to the innovation as the first foreign company that went to subsidiary of China in engaging to lease. Despite of the risky that the company had experienced in China and in many competitors, the company is still optimistic that in the long run, it is advantageous and can outweigh the risks. In only the year of 2002, the company identified the major target in its international growth by having the objective of billion of sales and in sourcing. The strategy of the company is having the growth of the sourcing, sales, and expansion of manufacturing capabilities in serving the customers in China and around the world. The made one GE practical and strategic approach for China and has 4 components and there it was the GE would be source of the goods and parts for the domestic producers which can be costs saver for 10%. The majority of the sourcing of GE China is update and consumer products. The other components of GE are all focused on own swelling market. It has also plans in manufacturing its products in China and can develop the distribution channels in building the services and in selling both locomotive and product-related services as well as engine services and the company can have the more sophisticated financial services (Ibid).
Impact of Outsourcing in American Economy
There are many impact of the outsourcing to the American Economy and for all of the Americans given the enormous stake. Thus, accordingly, there are white collar jobs which are risky in the outsourced offshore which are call center operators, back office jobs, and customer service as well as other professions. These are the American Dream which can generate the bulk of taxes and revenues that can be fund to health, education, social security, and infrastructures. These job losses can be the fold for the fool’s of the companies which can cause the US companies in losing the best employees, the consumers that buys products, and the human capital. The employees that are displaced by the foreigners are also left by the unemployed or the lower paid work can reduced the presence of the consumer market and can give few retirement savings for the new investment. The US workers are having trouble in their career and went offshore due to unemployment and the worst scenario is to go overseas. This is due to the shield to foreign labor> the outsourcing can result to the American to have competitions regarding the head-to-head into the foreign workers. The result of the scenario is lose-lose for the American Businesses, the American employees and to the American government. The outsourcing also had brought the unemployment to the major drop of the university enrollments and to the engineering field in the scientific and technical disciplines. Despite of the fact that the remaining jobs are worked by the lower paid foreigners and discharged the force of the train into the foreign replacements. The US corporations are all essential in the Asian Emerging market and have no assurance to outcompete the local Indian and Chinese companies that rapidly increase its high technology. Most of the Indian IT companies also are outcompeting to the US counterparts. Since, the outsourcing of America are the products from Mexico, Asia, and Ireland, the US companies is giving the technology that are captured into the US firms which can reduces the brand name from the sales force (Roberts, P 2005).
On the other end, the outsourcing can also have benefits to the American economy. This can result to the lowering of the cost and to the higher production as well as the consumers are all realizing the benefit of the lower rates and price for the goods and services. The manufacturing jobs that are normally the most focus candidates for the outsourcing business are lost to America but to the other countries as well because of the emerging market regarding the new technologies and eliminates the needs of the new manual labor. Moreover, the manufacturing of the jobs overseas can results to the people of the United States to be taking on manufacturing jobs from the other countries. Thus, the United States should to accept the practices of the part of free market and not to impede outsourcing which can recognize the historical certain industries due to the technological advancement or to the more efficient approaches in the accomplishments of the task outside the borders of the country. The people on the developing ca have the work of the lost jobs of Americans and can receive opportunities for the increase of the own wealth and can be spent in the America’s products and services. Then, the free market can generate the new jobs, new products, and new wealth in the foundation of the creation earlier (Wise to Social Issues, 2008).
Conclusion
For the process outsourcing, there is the competition between China, Mexico, and India for the year 2006 and these are the countries competed for attention for General Electric (GE). Their respective government is striving hard for the financial climate aroused in the accommodation of enhancing the outsourcing and can create jobs. The China was advantageous for having the attractive sourcing for having the electricity costs and labor as compared to Mexico. On the contrary, the production have certain differences, the labor cost unit in China are higher as compared to the Mexico. On the other hand, the Mexico remains to be advantageous which can contribute in attracting the foreign capital. This country is geography aligned to US which can be inexpensive and reliable for shipping advantage and to the swift time of transit. The country can also have the greater protection into the intellectual property as compared to China and to the transparency of the administration and regulation for the industry. The country also refinanced and reformed its banking system while recognizing the rule of the law. For the continuing competition of outsourcing in India and China, both dominates the top two positions of the investors network as initial investment and to the offshore investment locations for the IT services. In this manner, GE remained its strong positions in both China and India even though India has higher revenue as compared to China. Thus, both countries are now potential for sourcing business. For the United States, its focus was the jobs. Thus, due to the wages and the pressure of the quality of jobs and the deterioration and can be risky due to outsourcing due to the fact that the skilled-workers are all willing to accept the works. In the continuing of the American Companies to China, Mexico, and India, the loss for the jobs are affecting likely to the different income cohorts and the practice of the outsourcing can help to boosted domestic GDP and the free trade.
Bibliography
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Outsourcing 2008, Business Dictionary, viewed 16, October 2008, http://www.businessdictionary.com/definition/outsourcing.html.
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Vietor, R and Veytsman, A 2007, “American Outsourcing”, Harvard Business School, Harvard Business School Publishing, Boston.
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