1.0 Introduction
First of all, outsourcing can be regard as finding an outside or external vendor to conduct all or certain part of an organisational activity and this method is usually practiced by Transnational Corporations in their business operations due to cost constrain (Ashley E, 2008). (Please refer to appendix 1.0 for more information on Transnational Corporations). Furthermore, the main factor that forces many companies to be more low cost oriented is due to the massive pressure of the current competitive market and also the destructive price wars causes by globalisation that has been circulating in the market ever since the pre-1900s era (Henry A, 2008). (Please refer to appendix 1.0(A) for more information on History Of Outsourcing). In addition to that, by cutting cost in any way can eventually effects the specific company`s position in the market and that is why many companies also tend to choose those low wage countries in Asia for the outsourcing of their non-core business activities (Ashley E, 2008). The non-core business activity that the companies usually seek for outsourcing will be ranging from packaging and distribution, assembly and many more. Thus, through the existence of outsourcing ultimately enabled companies to focus on the prospective directions of activity, utilise the available resources efficiently, development of core competencies and to gain competitive advantage as well (Lacity MC & Willcocks LP, 2001).
In accordance with that, the first country that was widely noticed to be the main option for companies to seek for outsourcing is none other than China whereby those large companies like Transnational Corporations whose is in the line of manufacturing industry came to China to open its own manufacturing plant and the reason is because of the cheap labour with flexible working hours unlike other countries which they have a fixed working hours with the protection of labour law (Cottrill, K. 2003). So, that is why China usually will be the preferred country in terms of foreign investment by Transnational Corporations and also attracting jobs (Bielski, L. 2003).
2.0 Types Of Outsourcing
2.0 (A) Nearshore Outsourcing
As a matter of fact, Nearshore outsourcing was a way practiced by some companies to get an activity or services done by citizens from neighbouring countries rather than the people in their own home country and the benefits are similar time zones, language, and not much cultural gap between the countries (Margaret Rouse, 2007). As an example, most of the companies in United States Of America (USA) carried out outsourcing to their neighbouring countries like Mexico and Canada (Allen J.et.al, 2003). As an addition, an example from Asian countries will be Malaysia and Singapore which both of this countries usually exchange their resources mainly worker whereby some of the companies in Singapore will depend on Malaysia to get the work done and same goes to Malaysia as well which they also depends on Singapore in some of the business activity (Geewax, M. 2004). An example will be Gymtech Feedmill Sdn.Bhd which it is a poultry company based in Malaysia where they eventually outsource the staff from Singapore (The Edge, 2013). However, there are still some arguments that stated nearshore outsourcing is too localised and could not follow with the rapid pace of developments in business and technology (Mclvor.R, 2005).

2.0 (B) Offshore Outsourcing
As widely known, Offshore outsourcing is a way practiced by some companies mostly in United States Of America (US) and developed countries whereby it exports the work mainly Information Technology (IT) related to the other countries in the world which has more lower labour costs, tax savings and also stable political conditions (Bragg SM, 2006). The main reason is to be more prices competitive and compete with businesses in other countries. An example will be Apple Company which they are having its manufacturing plant in China instead of their home country and this is because of the low costs factor. Thus, this is causing US its home country`s unemployment in IT industry to increase rapidly (Anderson B, 2001).

3.0 Advantages and Disadvantages Of Outsourcing
Advantages
As a matter of fact, once again the important reason for all of the companies especially Transnational Corporations is actually to maintain and create the competitive edge in the global market which the competitions faced tend to be more challenging and will be left out if the company are not competitive enough (Prahalad CK, Hamel G. 2003). As for the other reasons that influencing the companies to engage with outsourcing will be improve quality and reliability of its own operations, reduce cost and delivery time of production, access to worldwide technology, obtain the resources that are not available in own home country, able to penetrate foreign market, has the flexibility in fulfilling worldwide market`s needs, increase capital funds of the company and ability to compete with the competitors locally and internationally (Borga.et.al, 2003). Hence, the top listed reasons and advantages for companies to engage in outsourcing can be found in the Figure 1.0 and Table 1 below:
Figure 1.0: The Top 10 Listed Reasons For Companies To Engage In Outsourcing

i. Cost Constrains
As mentioned earlier that one of the factor that influence most of the companies chose to engage in outsourcing is due to its cost saving feature whereby before making the decision to outsource the companies usually will put the costs into consideration (Bragg SM, 2006). In this matter, by getting an outsource service provider or worker who has lower cost structure and efficient then the internal costs for the specific company is reduced (Power MJ.et.al, 2006).

ii. Inexpensive And Technically Skilled Labour
Moreover, besides of cutting internal cost the companies also focuses on more productive labour or worker whereby when they decide to move its operations to other countries like China and India then the labour cost are relatively cheap and has the required technical skill as well (Borga.et.al, 2003). Thus, this will not only minimise the cost but it is able to maximise the profits of the companies as well (Allen J.et.al, 2003).

iii. Access To Latest Technology With Lower Cost
As a matter of fact, the development of technology has grown very rapidly and it is very costly and risky for a company to have its own Research and Development Department to invent it for them. Thus, the most effective and cost saving way to obtain those technology is through outsourcing from other countries who already had the specific technology (Shniederjans MJ, Cao Q. 2006). As an example, Proton the automobile company in Malaysia is doing outsourcing for the engine part whereby the company previously bought the engine from Japan`s automobile company Mitsubishi and now Proton are getting engine from Italian based company Lotus. This is because Proton does not have the required technology to produce its own engine and it is costly including risky to do so (Jahabar Sadiq, 2013).

iv. Develop Global Market & Increase Productivity
On the other hand, outsourcing also is a good and effective way to develop global market because through this the companies can have multilingual working environment. Not only that, it is also able to reduce the delivery time to regional foreign markets including having local market access efficiently and also lower taxes (Henry A, 2008). Besides that, by engaging in outsourcing also enabled achievement in company`s performance whereby through this the companies are able to hired skilled manpower in larger scale at lower costs. Thus, this eventually increase customers satisfaction due to efficiency and effectively in conducting business activities as a result from sufficient of manpower (Allen J.et.al, 2003).

Disadvantages
In this case, although it cannot be deny that outsourcing does bring a lot of advantages to the companies especially in terms of costs and market penetration but the companies must also face with the disadvantages that occurred in this matter (Knight.et.al, 2004). Thus, the disadvantages of outsourcing are as follows:

i. Language Problems
In international business, the skills in communication is indeed very important especially if the official language is not English and the citizens in that specific country do not have enough exposure on English Language for example the country like Korea, Vietnam and many more (Barthelemy, 2003). Hence, this is where the difficulty arises which they will have the problem during signing or abiding to the contracts given by the companies and it is hard for the company`s management to communicate with the staff especially the manuals and instructions (Shniederjans MJ, Cao Q. 2006). Thus, this is why China IT outsourcer are far behind as compare to India and many foreign investor foresee a numerous obstacles in terms of languages and cultural if they invest in China (Amoribieta.et.al, 2001).

ii. Fear Of Losing Control
In this matter, engaging in outsourcing usually will slightly causes the companies to lose the control on the processes service delivery which it may affects the company`s image and reputations (Farrell, D. 2005). Thus, choosing the right service providers for collaboration is a critical matter because if the company chose the right service providers then the issues of quality, branding, overruns of costs, channel conflict and cultural and languages difference can be solve in an effective way (Forrester Research, 2002). However, there are cases the collaborated service providers counterfeiting products and expose the technology secrets of the company. So, that is why a frequent visits to the partners and make them feel like they are part of the company is an essential element to achieve success in this matter (Prahalad CK, Hamel G. 2003).

iii. Unsecured Intellectual Property Rights
In the aspect of engaging in outsourcing, intellectual property protection on copyrights and trademarks are relatively very important in which an agreement on this protection must be made during the outsourcing process. However, although with the existence of this protections but still it is very weak and unsecured especially in the developing countries whereby the the compact disc factories in China are producing up to 80 million of counterfeits a year and it was exported throughout Asia (Forrester Research, 2002).

iv. Different Political and Business Environments
In this case, there are many risks when engaging in outsourcing especially the specific country`s problems like terrorism, unstable governments, devalue of currency and political unrest which can cause a numerous of serious problems to the companies whereby it can lead to global outsourcing failure if this matter persist in the long term (McDougall.et.al, 2004). Thus, providing a stable political environment for foreign investment is very important to attracts foreign investor to invest in the country especially developing country (Gul A, Zaib A. 2010).

4.0 Recommendation And Conclusion
Outsourcing has indeed became an essential practices among companies especially Transnational Corporation in order to achieve its objectives but the existence of its advantages and disadvantages is a matter which cannot be deny (Lyons, E.R. 2001). As a matter of fact, outsourcing can bring a huge changes and impact to the companies in good way and also able to bring risks as well. This merely depends on how the companies manage and react to the issue that occurred when engaging in outsourcing and in order for the specific company to achieve success in this global outsourcing then firstly it must accept the issue as a challenge and must solve it in an effective way. Besides that it is also recommended that the companies should also put in mind that outsourcing is just like any other business practices which it should be applied carefully in order to achieve more advantages and prevent disadvantages from happening too frequent till out of control. Secondly, outsourcing should be done according to the framework of the host countries either in terms of economic or structure otherwise it could cause massive problems.
Therefore, it can be concluded that outsourcings has ultimately made the structure of international competition and adjustment of labour market more challenging. However it does have its own advantages and disadvantages and the success or failure are very much depends on the companies and the countries that involved in it.

Appendices
1.0 Transnational Corporations
Transnational corporations (TNCs) are incorporated or unincorporated enterprises comprising parent enterprises and their foreign affiliates. A parent enterprise is defined as an enterprise that controls assets of other entities in countries other than its home country, usually by owning a certain equity capital stake. An equity capital stake of 10 per cent or more of the ordinary shares or voting power for an incorporated enterprise, or its equivalent for an unincorporated enterprise, is normally considered as a threshold for the control of assets (in some countries, an equity stake other than that of 10 per cent is still used. In the United Kingdom, for example, a stake of 20 per cent or more was a threshold until 1997.). A foreign affiliate is an incorporated or unincorporated enterprise in which an investor, who is resident in another economy, owns a stake that permits a lasting interest in the management of that enterprise (an equity stake of 10 per cent for an incorporated enterprise or its equivalent for an unincorporated enterprise).
Globalisation has resulted in many businesses setting up or buying operations in other countries. When a foreign company invests in a country, perhaps by building a factory or a shop, this is called inward investment. Companies that operate in several countries are called multinational corporations (MNCs) or transnational corporations (TNCs). The US fast-food chain McDonald's is a large MNC - it has nearly 30,000 restaurants in 119 countries.
Transnational corporations -- those corporations which operate in more than one country or nation at a time -- have become some of the most powerful economic and political entities in the world today. From Joshua Karliner, in his book, The Corporate Planet: Ecology and Politics in the Age of Globalization [Sierra Club Books, 1997], we can gleam a host of fundamental realizations, including the fact that many of these companies have far more power than the nation-states across whose borders they operate.
For example, the combined revenues of just General Motors and Ford -- the two largest automobile corporations in the world -- exceed the combined Gross Domestic Product (GDP) for all of sub-Saharan Africa. The combined sales of Mitsubishi, Mitsui, ITOCHU, Sumitomo, Marubeni, and Nissho Iwai, Japan’s top six Sogo Sosha or trading companies, are nearly equivalent to the combined GDP of all of South America. Overall, fifty-one of the largest one-hundred economies in the world are corporations. The revenues of the top 500 corporations in the U.S. equal about 60 percent of the country’s GDP. Transnational corporations hold ninety percent of all technology and product patents worldwide, and are involved in 70 percent of world trade. More than thirty percent of this trade is “intra- firm”; in other words, it occurs between units of the same corporation.
The number of transnational corporations in the world has jumped from 7,000 in 1970 to 40,000 in 1995. While global in reach, these corporations’ home bases are concentrated in the Northern industrialized countries, where ninety percent of all transnationals are based. More than half come from just five nations: France, Germany, the Netherlands, Japan and the United States. But despite their growing numbers, power is concentrated at the top. i.e., the 300 largest corporations account for one-quarter of the world’s productive assets.
The United Nations has justly described these corporations as “the productive core of the globalizing world economy.” Their 250,000 foreign affiliates account for most of the world's industrial capacity, technological knowledge, international financial transactions, and ultimately the power of control. In terms of energy, they mine, refine and distribute most of the world’s oil, gasoline, diesel and jet fuel, as well as build most of the world’s oil, coal, gas, hydroelectric and nuclear power plants. They extract most of the world’s minerals from the ground. They manufacture and sell most of the world’s automobiles, airplanes, communications satellites, computers, home electronics, chemicals, medicines and biotechnology products. They harvest much of the world’s wood and make most of its paper. They grow many of the world’s major agricultural crops, while processing and distributing much of its food.
Given their dominance of politics, economics and technology, it is not surprising to find the big transnationals deeply involved in most of the world’s serious environmental crises.
Transnational corporations exert significant influence over the domestic and foreign policies of the Northern industrialized government that host them. Surprise! Indeed, the interests of the most powerful governments in the world are often intimately intertwined with the expanding pursuits of the transnationals that they charter. At the same time, transnational corporations are moving to circumvent national governments. The borders and regulatory agencies of most governments are caving in (or being paid off) to the New World Order of globalization, allowing corporations to assume an ever more stateless quality, leaving them less and less accountable to any government anywhere.
These corporations, together with their host governments, are reorganizing the world economic structures -- and thus the balance of political power -- through a series of intergovernmental trade and investment accords. These treaties serve as the frameworks within which globalization is evolving -- allowing international corporate investment and trade to flourish across the Earth. They include:

* The Uruguay Round of the General Agreement on Tariffs and Trade (GATT)

* The World Trade Organization, which was created to enforce the GATT's rules.

* The proposed Multilateral Agreement on Investment. (MAI)

* The North American Free Trade Agreement (NAFTA).

* The European Union (EU).
These international trade and investment agreements allow corporations to circumvent the power and authority of national governments and local communities, thus endangering workers’ rights, the environment and democratic political processes.
A legitimate question is: Is the World Trade Organization an arm of the United Nations?
In a “Substantive session”, 16 July 1996, the United Nations provided a discussion and a “draft decision submitted by the President of the Council on the basis of informal consultations” on the topic of one item on their agenda, i.e. “Non-Governmental Organizations” (i.e. Transnational and National Corporations):
“The Economic and Social Council, reaffirming the importance of the contributions of non-governmental organizations to the work of the United Nations, taking into account the contributions made by non-governmental organizations to recent international conferences, [emphasis added]
“Decides to recommend that the General Assembly examine, at its fifty-first session, the question of the participation of non-governmental organizations in all areas of the work of the United Nations, in the light of the experience gained through the arrangements for consultation between non-governmental organizations and the Economic and Social Council.”
In many respects, the logic is inescapable. If as few as 300 Transnational Corporations (TNCs) do indeed represent 51% of the largest one-hundred economies, then it is basic economic (and therefore political) logic that the TNCs should be represented at the United Nations!!! Or else, one needs to remove from the General Assembly all the smaller economies (countries). But then this also implies that at some point a TNC or two will become a member of the Economic and Social Councils, and then, perhaps, the General Assembly. And then, of course, the Security Council?
Is this altogether bad news? If we are replacing tyrannical, autocratic, or undemocratic member nations with TNCs (who are theoretically answerable to shareholders, and where anyone in the world can become a shareholder), then it might not sound so bad. However, there are shareholders and there are shareholders. Holding a hundred shares of stock does not count for quite as much as holding ten million shares. And the reality is that if TNCs do become effectively sovereign nations, then it’s inevitable that the rich shareholders will use their power to take over the TNCs and become the world’s elite governing force. What the United Nations is perhaps not taking into account, is the unequal distribution of control over the destiny of a TNC. The fact that CEOs and high executive officers have been taking any and most all corporate shareholders to the cleaners for decades is just more fuel to the raging inferno of the lack of corporate accountability.
There is a slight problem, however. The TNCs and domestic major corporations already control the governments of the United States and most of the industrialized nations. This is done by Corporate Politics, and the wholesale purchase of politicians. Already in place is a Corporate State, which wields the economic power of Money. This, by the way, is not a new development. Even in the United States, the dye was cast by the Fourteenth Amendment to the Constitution for the United States of America, whereby private corporations were given the status of persons -- and thus allowed to enjoy the benefits of the Bill of Rights, without the commensurate unlimited liabilities of life. In other words, it’s pretty much a done deal.
The problem, of course, is not merely the greed, power-hungry, and irresponsible actions of certain CEOs and the elite of the TNCs but also those who support them. The latter clearly includes bribed governments, but they also include the average person who buys the products and uses the services that these corporations provide. The fact that there is seemingly little choice -- due to governmental intervention -- makes it less of a charge of negligence to the average individual. But these same individuals also often take the path of least resistance, and choose the quality of life which includes telephones, Inter net connections, utilities and services at their beck and call, easy transportation, vacations at remote locations, and so forth and so on. An intriguing discussion of this idea is included in One World Order a conservation among several interested observers.

1.0 (A) History Of Outsourcing
The history of outsourcing is deeply embedded in the history of the growth of the Modern Business Enterprise, which sprang up in the latter half of the 19th Century. Historians in the past fifty years have helped us to understand this sudden growth. As the saying goes, what is old is new again. The changes in modern business practices strongly resemble trends that took place over a century ago. It is important to follow the historical model that the leading business historian Alfred Chandler set forth: value judgments are to be left out and only what actually happened should be talked about.
Alfred D. Chandler is probably the most influential business historian in American History. A Harvard graduate, and now professor, he directed business history towards objective truth to help explain businesses’ stunning growth and impact on America. His “school” was a clear backlash to individual biographies and the value judgments that came with it. Chandler did not attempt to ask: “was this good or bad”, but instead asked, “Why and how did this happen?” The different goals gave far different results. In the Robber Barons vs. Industrial Statesmen debate, Chandler was “faulting both sides for failing to make the requisite effort to understand the managerial revolution in American business; for not doing even a fraction of the primary research necessary to support sweeping characterizations of business executives as either Robber Baron or Industrial Statesmen”; the result was that Chandler “transformed the nature of the field.” The point to be made for our policy makers is that to solve future problems, we must understand what is occurring in the business world, without attaching “good” or “bad” to the forces behind the actions of businessmen.
The Forces Set the Stage For the first time in history, the late 1800s saw some countries become nations of abundance, instead of scarcity. Goods of all kinds were provided at a lower price in vast quantities. This was made possible by a series of technological improvements. The first major innovation was the railroad. This was an evolution: countries moved from turnpikes, to canals, and finally to railroads. It is also important to know that states themselves promoted these innovations by providing all types of subsidies. The second major innovation was in the field of communications: the telegraph provided near instant ability to keep in contact with other district offices of a company. Communication was also far more reliable; businessmen could be sure their messages were arriving at their desired location. JoAnne Yates said it best in Control Through Communication (1989), “the spread of the telegraph and of railroads encouraged firms to serve larger regional and national markets, while improvements in manufacturing technology created potential economies of scale” The importance in a modern context is clear: there will ultimately be more advances in communications and transportation, creating new business models. There will not only be national markets; there might be global ones, which would be the case with modern outsourcing.
Been There, Done That History has a way of repeating itself, having humans respond to similar movements. Generally the problem is that Americans find that there is something new about what they are facing. Offshoring seems like it is new, and it is, but there are similarities with past events in American history - most notably after the Civil War when northern textile factories moved down South. State governments, such as Massachusetts, had to deal with this movement of employers. At the turn of the century, the Massachusetts government imposed standards of conduct that were too high on businesses. Businesses tried to get corporate charters to get away from these restrictions and “in order to meet the strong competition of out-of-sate businesses which had thrived with liberal charters.” The Bay State had much more taxes than other states, even taxing the market value of the securities in excess of property values. This, naturally, caused many successful businesses to flee to other states. The businesses that continued to do business in the state mostly charted themselves in other states; in 1901 the number was almost two-thirds. Massachusetts became wise, passing corporation acts in 1903 and 1908 to ease standards. In the past, a protective tariff could help manufacturers, but with competition intensifying from domestic sources, the government could not give such help.
Foreign Workers In the history of industrialization and the modernization of developing nations, it has long been a tradition to seek foreign help when possible. In fact, one of the greatest success stories in this tradition has been the Japanese tale. After its revolution in 1868, Japan was on the quick path to modernization. They realized that they needed the assistance of experts, so they hired foreign technicians and engineers to set up their factory system and taught native Japanese how to operate the high-tech equipment. Educated foreign workers can be a pivotal addition to a growing economy; however, there have been examples where the move has gone too far and later proved to be detrimental. A prime example of such a case was in Russia during the late 1800s. ”Russian Industrialization was carried out by foreigners – a successful international firm like Singer, for example, or the large number of British engineers – or had at least been created by foreign investors.” The trend became so excessive that by 1914, 90% of mining and nearly 100% of oil extraction was foreign-owned, not to mention similar high numbers in other industries. Though short-term benefits were clear, Russia was far less of an industrial power than how the world saw it.

2.0 Case Study
Case study I: non-profit organization uses outsourcing to solve current problem
The problem:
The National University of Singapore (NUS) is a large educational institution, and there are more than 23,000 undergraduate and about 9,000 graduate students in school. The problem is that although NUS already had a well-developed IT infrastructure to support students and faculty, the drastic increase of help desk calls each year due to the requests from incoming students and students abroad had strained the school’s IT resources. The increased workload resulted in the increasing average duration of help desk calls, and user’s dissatisfaction.
The solution: IBM Global Technology Service built a team to help call center problem.
(Outsourcing)
The results:
1. IBM Services team help solve the routine problems with IT supports, so IT staffs have more time in solving critical and non-routine problems, which can save university much cost and time in doing more things.
2. IBM Services team provides expertise services of analyzing and monitoring university’s IT infrastructure; therefore, IT staffs would understand the conditions of IT infrastructure better, and then they can solve related problems more effectively.
3. IBM Services team logs and documents some frequently asked questions from students, and students can check those answers by themselves without through help desk call, which can largely reduce the amount of calls.
4. It also provides extended supports for users who need help after normal business hours.
What’s difference between doing this job by IT staffs and by outsourcing?
1. University’s IT staffs are insufficient to respond the increasing questions from students and other users. Each IT staff may have too many jobs, and the overload may result in IT staffs’ complain, which may also result in the unpleasant job attitude toward students who are requesting. Finally, user’s satisfaction will be lowered. Then, why not apply for new staffs? The personnel budget is not usually high, and applying for a new IT staff needs spend time and cost in training.
2. IBM provides expertise which university’s IT staffs lacks.
What managerial issues should be concerned?
1. Knowledge and systems transferring: After IBM services are due, they may take 7 away all the systems and knowledge with them, University’s original problems will reappear, and the fundamental problem did not be fixed or solved.
2. Cost/ Benefit issues: If university’s IT infrastructure does not have serious fundamental problem, it would be more costly to apply an IBM service team to solve only the problem of increasing help desk call than to apply a new IT staff. Learn from the case:
It is important for managers to concern all the benefit and hidden risk and cost before making a decision.

INDIA: BACK OFFICE TO THE WORLD
A large number of companies are going offshore to develop and maintain their software: GE,Bank of America, Target, and American Express for example have formed partnerships with Indian firms such as Tata Consultancy Services, Wipro, & Infosys. A recent survey by the Indian National Association of Software and Service Companies found that almost two out of five Fortune 500 companies currently outsource some of their software requirements to India. The reason for this according to most research is that it saves time, money, and better work ethics; thus, India is ahead of competitors such as China. There are many reasons for India getting the Lion share of outsourcing. Cost is the chief reason for sending business to India. But the country's abundant manpower has made India a target destination for multinationals to back end their operations in India. Other reasons for companies outsourcing to India are:
- Labour Pool - graduating 75,000 English speaking IT professionals annually
- Cost advantage - US - $2500 a month versus India - $400
- Time difference - 10 hour time difference allows 24-hour service
- Higher Quality - 30% of the programmers in major US companies such as Microsoft are Indian
- Government Support - India has a National Minister of IT
- Thus because of its labour pool, lower cost, friendly government policies, infrastructure investment, and expertise, India is on a fast track to become a developed country. Given the economy, to become a truly "global Wal-Mart of services" (NASSCOM, 2005).

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