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Outsourcing

Outsourcing (or contracting out) is often defined as the delegation of non-core operations or jobs from internal production within a business to an external entity (such as a subcontractor) that specializes in that operation. Outsourcing is a business decision that is often made to lower costs or focus on core competences. A related term, offshoring, means transferring work to another country, typically overseas. Offshoring is similar to outsourcing when companies hire overseas subcontractors, but differs when companies transfer work to the same company in another country. Outsourcing became a popular buzzword in business and management in the 1990s. EDS was the first company to establish the outsourcing business.

Overview

Outsourcing is defined as the management and/or day-to-day execution of an entire business function by a third party service provider.

Outsourcing and/or out-tasking involve transferring a significant amount of management control to the supplier. Buying products from another entity is not outsourcing or out-tasking, but merely a vendor relationship. Likewise, buying services from a provider is not necessarily outsourcing or out-tasking. Outsourcing always involves a considerable degree of two-way information exchange, co-ordination, and trust.

Organizations that deliver such services feel that outsourcing requires the turning over of management responsibility for running a segment of business. In theory, this business segment should not be mission-critical, but practice often dictates otherwise. Many companies look to employ expert organizations in the areas targeted for outsourcing. Business segments typically outsourced include Information Technology, Human Resources, Facilities and Real Estate Management and Accounting. Many companies also outsource customer support and call center functions, manufacturing and engineering. Outsourcing business is characterized by expertise not inherent to the core of the client organization.

The overhead costs of customer service are typically less where outsourcing has been used, leading to many companies, from utilities to manufacturers, closing their in-house customer relations departments and outsourcing their customer service to third party call centers. The logical extension of these decisions was of outsourcing labor overseas to countries with lower labor costs, this trend is often referred to as offshoring of customer service.

Due to this demand call centers have sprung up in Canada, China, Eastern Europe, India, Israel, Ireland, Pakistan, Philippines and even the Caribbean. Many companies, most notably Dell and AT&T Wireless, have gained significant negative publicity for their decisions to use non-US labor for customer service and technical support; one of the most prominent complaints being the expectation that the replacement staff will have more trouble communicating with customers.

A related term is out-tasking: turning over a narrowly-defined segment of business to another business, typically on an annual contract, or sometimes a shorter one. This usually involves continued direct or indirect management and decision-making by the client of the out-tasking business.

The term "outsourcing" became more well known largely because of a growth in the number of high-tech companies in the early 1990s that were often not large enough to be able to easily maintain large customer service departments of their own. In some cases these companies hired technical writers to simplify the usage instructions of their products, index the key points of information and contracted with temporary employment agencies to find, train and hire generally low-skilled workers to answer their telephone technical support and customer service calls. These agents generally worked in call centers where the information needed to assist the calling customer was indexed in a computer system. The agents were often not able to tell the customer they did not actually directly work for the original manufacturer. In some cases, the agents are not allowed to even give out their real name.

Outsourcing, Offshoring, and Offshore Outsourcing

Note that “outsourcing”, “offshore outsourcing” and “offshoring” are used interchangeably in public discourse despite important technical differences. To be consistent, “outsourcing”, in corporate context, represents an organizational practice that involves the transfer of an organizational function to a third party. When this third party is located in another country the term “offshore outsourcing” makes more sense. “Offshoring”, in contrast, represents the transfer of an organizational function to another country, regardless of whether the work stays in the corporation or not. In short, “outsourcing” means sharing organizational control with another organization, or a process of establishing network relations within an organizational field. "Offshoring”, on the other hand, represents a relocation of an organizational function to a foreign country, not necessarily a transformation of internal organizational control.

Arguments for Outsourcing

A recent poll of economists by the Wall Street Journal found that only 16 % of them saw outsourcing as having a significant impact on the overall job picture. [1]

One criticism of outsourcing is that product quality suffers. But the outsourcing firm has freedom to move a firm department or division back home if its profits are suffering as a result of poor quality. In fact, many American companies like Dell have moved customer service divisions back to America as a result of poor quality [2]. The decision to outsource is like any other business investment decision in that there is risk. Critics of outsourcing often talk about outsourcing failures without mentioning instances of outsourcing success. The decision to outsource is like the decision to expand a business overseas, to incorporate computer technology, or to hire new workers. If the company does it correctly, it benefits from higher profits. Proponents of outsourcing believe that arguing that outsourcing leads to lower product quality is pointless because if it were true, consumer demand will force firms to shift back to producing the good or service in-firm rather than out-firm. That many large businesses outsource and continue to outsource suggests that in many cases outsourcing is successful in that it increases product quality, lowers costs substantially, or both.

Some economists have argued that outsourcing is a form of technological innovation analogous to machines on a car assembly line. American Motor Company Ford relied heavily on workers in the past to assemble car parts. Today these workers are replaced by machines because they are cheaper in the long run, produce better quality products, or a combination of both (the firm is trying to increase its quality to cost ratio, quality being defined by the consumer and inferred from revenue). Economists argue that machines on the car assembly line must have a higher quality to cost ratio than workers because, if they didn’t, there would be no incentive for the firm to replace workers with machines. Although workers’ jobs were lost from this replacement of workers with machines, the Ford Motor Company made more money by lowering costs (or increasing quality, thereby increasing revenue). Some argue that greater profits to the labor owners lead to higher consumption, which leads to further job creation, allowing those who lost jobs to gain jobs in other sectors of the economy. However, economists do concede that labor is not always perfectly mobile and that some workers may have difficulty getting new jobs. Some economists suggest that government training programs be provided.

A firm's motivation for replacing workers with machines is identical to the motivation for outsourcing, i.e. the firm is trying to maximize the quality of its product given cost (its productivity). Because outsourcing allows for lower costs, even if quality reduces slightly or not at all, productivity increases, which benefits the economy on aggregate.

Economist Thomas Sowell from the University of Chicago said “anything that increases economic efficiency--whether by outsourcing or a hundred other things--is likely to cost somebody's job. The automobile cost the jobs of people who took care of horses or made saddles, carriages, and horseshoes.” [1] Walter Williams, another economist, said “we could probably think of hundreds of jobs that either don't exist or exist in far fewer numbers than in the past--jobs such as elevator operator, TV repairman and coal deliveryman. ‘Creative destruction’ is a discovery process where we find ways to produce goods and services more cheaply. That in turn makes us all richer.” [2]

Professor Drezner reports that for every dollar spent on outsourcing to India, the United States reaps between $1.12 and $1.14 in benefits. [3] Drezner also points out that large software companies such as Microsoft and Oracle have increased outsourcing and used the savings for investment and larger domestic payrolls. Nationally, 70,000 computer programmers lost their jobs between 1999 and 2003, but more than 115,000 computer software engineers found higher-paying jobs during that same period. [3]

Advocates of outsourcing also claim that outsourcing-related fraud is insignificant, averring that such malpractices can occur in any country. For example, 40 million credit card numbers were stolen in June 2005 at CardSystems Solutions in Tucson, Arizona. (See the full story.). In December 2005, nearly 50 people were indicted in connection with a scheme that bilked at least $200,000 from Katrina relief fund at Red Cross claim center in Bakersfield, Calif., which handled calls from storm victims.

Criticisms of Outsourcing

Because "outsourced" workers are not actually paid agents of the company, it has been argued that there is less incentive for the agent to show loyalty or work ethic in its representation of said company. It has been therefore argued that quality levels of customer service and technical support of outsourced tasks are lower than where they have remained 'in-house'.

The 2004 US presidential election race focused on outsourcing to some degree. This debate did not center on problems of declining quality of customer services but on the threat to US jobs and work. Criticism of outsourcing, from the perspective of US citizens, by-and-large, revolves around the costs associated with transferring control of the labor process to an external entity in another country. A Zogby International poll reports that 71% of American voters believe that “outsourcing jobs overseas” hurts the economy and another 62% believe that the US government should impose some legislative action against companies that transfer domestic jobs overseas, possibly in the form of increased taxes on companies that outsource. The poll of over 1,000 Americans was conducted in August 2004 (See Zogby International survey results online at zogby.com).

Outsourcing appears to threaten the livelihood of domestic workers and the American Dream. This is especially true for high-tech workers who were promised the “jobs of tomorrow”- a phrase Bill Clinton iterated in 1994 to justify his conservative position on NAFTA. Outsourcing appears to work contrary to the claim that “free trade” will create the “jobs of tomorrow” in America when high-tech or high paying white collar jobs are transferred to or created in foreign countries. Thus, outsourcing is criticized as it represents a new threat to labor, contributing to rampant worker insecurity, and reflective of the general process of globalization where the United States government fails to mediate business-labor relations in a way conducive to prevailing values that places the American middle class worker as a central priority.

Criticism of outsourcing from the public and media sometimes tend to concentrate on lackluster customer service and technical support being provided by either local workers who are not actually employees of the company, or by overseas workers attempting to communicate with Americans in broken or incomprehensible English. Defenders of outsourcing say if this were true, then companies would experience market forces compelling them to return service and support handling back from the outsourced company. However, service and support are often not considered by customers as part of their original purchases. Customers only experience outsourced service and support after they have spent their money since sales is generally done in-house by the original company. Dealing with lackluster outsourced service is a negative surprise after the money is already spent.

Policy solutions to outsourcing are also criticized. One solution often offered is retraining of domestic workers to new jobs. However, some of these workers are already highly educated and already possess a bachelor's and master's degree. Retraining to their current level in another field may not be an option due to years of study and cost of education involved. There is also little incentive given that the jobs in their new field could also be outsourced as well. Proportions of workers trained for Science, Technology, Engineering, and Mathematics (STEM) fields fields in developing nations are viewed to outstrip traditional technology leaders such as the U.S. With these traditionally "safe" jobs perceived to be endangered, this raises questions regarding whether origin countries can maintain any comparative advantage given the losses in both low and high-value jobs.

There are also security issues concerning companies giving outside access to sensitive customer information. In April of 2005, a high-profile case involving the theft of $350,000 from four Citibank customers occurred when Indian call center workers in Pune, India, acquired the passwords to customer accounts and transferred the money to their own accounts opened under fictitious names. Citibank did not find out about the problem until the American customers noticed discrepancies with their accounts and notified the bank. (See the full report.)

Outright fraud is also a concern. In 2005, Intel discovered and fired 250 Indian employees after they faked their expense reports. The firings followed from Intel's internal Business Practice Excellence programme of expenses claims. The report concluded that fraudulent practises such as "faking bills to claim your allowances like conveyance [and] drivers’ salaries" were some common malpractices in India. Intel would not put up with such fraud. NASSCOM, which is a forum of IT and ITeS companies, has attempted to address these fraud concerns in India by creating the National Skills Registry. That database contains personal and work-related information, enabling employers to verify a staff member's credentials and allowing police to track the background of workers.

Democratic U.S. presidential candidate John Kerry blasted firms that outsource jobs abroad or that incorporate overseas in tax havens to avoid paying their fair share of US taxes during his unsuccessful 2004 campaign, calling such firms "Benedict Arnold corporations," in reference to the infamous traitor Benedict Arnold.

It is argued a malicious implementation of the Higher Education Role Analysis (HERA) in the UK may force Higher Education administrative and support staff to prematurely retire or seek for new employment in other organisations, thus freeing of staff many departments which could then be effectively outsourced. Outsourcing departments like Accounts, Payroll and Procurement is now common practice, as seen in August 2005 at the University of Portsmouth.

Notes

  1. ^  This view is borne out by a recent study by Richard Freeman at the National Bureau of Economic Research in Washington. He found that in the year 2000, 17 % of university bachelor degrees in the U.S. were in science and engineering compared with a world average of 27 % and 52 % in China. Universities in the European Union granted 40 % more science and engineering doctorates than the United States, with that figure expected to reach nearly 100 % by about 2010 according to Freeman's paper.
  2. 1. ^  “Outsourcing” and “Saving Jobs” by Thomas Sowell
  3. 2. ^  Should we “Save Jobs”? by Walter Williams
  4. 3. ^  "Outsourcing is the Kool" (kOOL PEOPLE)

Literature

Mark Kobayashi-Hillary. 2004. (2nd ed 2005) Outsourcing to India. ISBN 354023943X.


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(2nd ed 2005) Outsourcing to India. ISBN 354023943X. Recently ICC choose Dubai as its new Headquarters leaving Lords which hosted ICC for 95 years. 2004. Dubai is fast gaining its name as international venue for sporting activities. Mark Kobayashi-Hillary. Dubai maintains cultural, economic and educational ties with Dundee, Scotland, Damascus, Detroit, Geneva, Istanbul, Osaka, Beirut, Shangai, Jarusalem, Casablanca, Guangzhou,. Outsourcing departments like Accounts, Payroll and Procurement is now common practice, as seen in August 2005 at the University of Portsmouth. There is no home postal delivery with post office boxes used instead.

It is argued a malicious implementation of the Higher Education Role Analysis (HERA) in the UK may force Higher Education administrative and support staff to prematurely retire or seek for new employment in other organisations, thus freeing of staff many departments which could then be effectively outsourced. Street 1a, Villa 2
Umm Suqeim 3
Dubai, United Arab Emirates. presidential candidate John Kerry blasted firms that outsource jobs abroad or that incorporate overseas in tax havens to avoid paying their fair share of US taxes during his unsuccessful 2004 campaign, calling such firms "Benedict Arnold corporations," in reference to the infamous traitor Benedict Arnold. For example:. Democratic U.S. In common practice, an address consists of: street number, building number and community name although the order may very. That database contains personal and work-related information, enabling employers to verify a staff member's credentials and allowing police to track the background of workers. Addressing and location: The formal addressing system is: sector number, community number, street number and building number.

NASSCOM, which is a forum of IT and ITeS companies, has attempted to address these fraud concerns in India by creating the National Skills Registry. Note that these progressions are repeated within each community so, for example there will be numerous street number 5 along the Jumeirah 1, 2, 3, and Umm Suqeim 'strip'. Intel would not put up with such fraud. Odd numbered street are perpendicular to the coast and increase as one moves away from the creek. The report concluded that fraudulent practises such as "faking bills to claim your allowances like conveyance [and] drivers’ salaries" were some common malpractices in India. In general, even numbered streets run parallel to the coast and increase in number as one goes inland. The firings followed from Intel's internal Business Practice Excellence programme of expenses claims. Within these communities are numbered streets and house/building numbers.

In 2005, Intel discovered and fired 250 Indian employees after they faked their expense reports. Communities:. Outright fraud is also a concern. Currently there are 44 communities. (See the full report.). Each sector is sub-divided into communities of various size with major (named) roads as the bountries. Citibank did not find out about the problem until the American customers noticed discrepancies with their accounts and notified the bank. Dubai is divided into 9 sectors: 1-4 & 6 are urban; 7-9 are rural; 8 is Jebel Ali.

In April of 2005, a high-profile case involving the theft of $350,000 from four Citibank customers occurred when Indian call center workers in Pune, India, acquired the passwords to customer accounts and transferred the money to their own accounts opened under fictitious names. Most contracts and tenancy agreements do not stand up to the standards of international law and almost always grossly favour the lessor or the company selling property. There are also security issues concerning companies giving outside access to sensitive customer information. Legislation in this area is still sketchy as the property market is a new one and rights of tenants and landowners are based on shaky principles borrowed mainly from European law. With these traditionally "safe" jobs perceived to be endangered, this raises questions regarding whether origin countries can maintain any comparative advantage given the losses in both low and high-value jobs. This cap demonstrates the realisation that uncontrolled rents can hamper development. Proportions of workers trained for Science, Technology, Engineering, and Mathematics (STEM) fields fields in developing nations are viewed to outstrip traditional technology leaders such as the U.S. Rents have also skyrocketed with the recent inflow of professionals and companies from around the world who are attracted by Dubai's no-tax benefits although rises have been capped to 15% per annum up to 2006 under a directive from Sheikh Mohammad.

There is also little incentive given that the jobs in their new field could also be outsourced as well. In Dubai, demand is currently outstripping supply by a significant margin and is showing no signs of slowing in the near future. Retraining to their current level in another field may not be an option due to years of study and cost of education involved. The larger of the property tycoons are Al Nakheel and Emaar Properties. However, some of these workers are already highly educated and already possess a bachelor's and master's degree. One of the other reasons for the boom in construction is the recent reversal of a law in 2002 that allows non-nationals of the UAE to own property (not land) in Dubai (albeit freehold and 99 year leases are actually sold to people with ownership still remaining with private companies). One solution often offered is retraining of domestic workers to new jobs. Tourism is also being promoted at a staggering rate with the construction of Dubailand and other projects that include the making of mammoth shopping malls, theme parks, resorts, stadiums and other various tourist attractions.

Policy solutions to outsourcing are also criticized. The Dubai government does not want to depend on its oil reserves which are largely believed to become exhausted by 2010 and, as such, has diversified its economy to attract revenues in the form of expanding commercial and corporate activity. Dealing with lackluster outsourced service is a negative surprise after the money is already spent. One of the main reasons for the boom in construction in Dubai is its drive to diversify the economy. Customers only experience outsourced service and support after they have spent their money since sales is generally done in-house by the original company. This is partly due to the fact that labourers from the Indian subcontinent accept lower wages than those from other countries. However, service and support are often not considered by customers as part of their original purchases. Construction in Dubai and the UAE in general is a much faster process than in any Western country.

Defenders of outsourcing say if this were true, then companies would experience market forces compelling them to return service and support handling back from the outsourced company. In many areas, it is not easy to see Dubai's sky without at least one crane in your view; some say 16% of the world's large construction cranes would stand there. Criticism of outsourcing from the public and media sometimes tend to concentrate on lackluster customer service and technical support being provided by either local workers who are not actually employees of the company, or by overseas workers attempting to communicate with Americans in broken or incomprehensible English. Since 2000, Dubai's municipality has initiated a plethora of construction phases and plans across the entire city of Dubai, predominantly in the Mina Seyahi area, located further from Jumeirah, towards Jebel Ali. Thus, outsourcing is criticized as it represents a new threat to labor, contributing to rampant worker insecurity, and reflective of the general process of globalization where the United States government fails to mediate business-labor relations in a way conducive to prevailing values that places the American middle class worker as a central priority. In addition, Emirates has placed an order of 42 of the new Boeing 777 aircraft in November 2005. Outsourcing appears to work contrary to the claim that “free trade” will create the “jobs of tomorrow” in America when high-tech or high paying white collar jobs are transferred to or created in foreign countries. The A380 aircraft have already been charted to fly from October 2006 onwards.

This is especially true for high-tech workers who were promised the “jobs of tomorrow”- a phrase Bill Clinton iterated in 1994 to justify his conservative position on NAFTA. The airline has placed an order of 45 of Airbus's A-380 'superjumbo' doubledecker aircraft, the largest of which has a capacity of 641 passengers. Outsourcing appears to threaten the livelihood of domestic workers and the American Dream. The idea is to develop Dubai's air transportation ability so that passengers from any city can fly direct to Dubai. The poll of over 1,000 Americans was conducted in August 2004 (See Zogby International survey results online at zogby.com). Dubai is also investing heavily in developing the reach of its airline, Emirates. A Zogby International poll reports that 71% of American voters believe that “outsourcing jobs overseas” hurts the economy and another 62% believe that the US government should impose some legislative action against companies that transfer domestic jobs overseas, possibly in the form of increased taxes on companies that outsource. Seven monorails are also slated to be constructed to help feed the Metro system, connecting various places such as Dubailand, Palm Jumeriah, et al, to the main track.

Criticism of outsourcing, from the perspective of US citizens, by-and-large, revolves around the costs associated with transferring control of the labor process to an external entity in another country. Dubai is building this train system to ease congestion on its road network and to meet the transportation demands of its growing population. This debate did not center on problems of declining quality of customer services but on the threat to US jobs and work. Trains are expected to run every 90 seconds when the project is completed. The 2004 US presidential election race focused on outsourcing to some degree. The Dubai Metro will have 70 kilometers of track and 43 stations, 33 above ground and ten underground. It has been therefore argued that quality levels of customer service and technical support of outsourced tasks are lower than where they have remained 'in-house'. The metro will comprise two lines: the Green Line from Rashidiya to the main city center and the Red Line from the airport to Jebel Ali.

Because "outsourced" workers are not actually paid agents of the company, it has been argued that there is less incentive for the agent to show loyalty or work ethic in its representation of said company. Also involved are two other Japanese corporations, Obayashi and Kajima, and a Turkish company, Yapi Merkezi. In December 2005, nearly 50 people were indicted in connection with a scheme that bilked at least $200,000 from Katrina relief fund at Red Cross claim center in Bakersfield, Calif., which handled calls from storm victims. The construction contract for the project was given to Dubai Rapid Link (DURL)[11], a consortium lead by Mitsubishi Heavy Industries. (See the full story.). The Metro system is expected to be partially operational by 2009 and fully operational by 2012. For example, 40 million credit card numbers were stolen in June 2005 at CardSystems Solutions in Tucson, Arizona. There is currently a $3.89 billion Dubai Metro project under construction for the emirate.

Advocates of outsourcing also claim that outsourcing-related fraud is insignificant, averring that such malpractices can occur in any country. One of the more traditional methods of getting across Bur Dubai to Deira is through abras, small boats that ferry passengers across the Dubai creek, between abra stations in Bastakiya and Bani Yas Road, for a nominal charge of 1 Dh. [3]. Cabs can be found anywhere, any time although difficulties may be experienced during large events. Nationally, 70,000 computer programmers lost their jobs between 1999 and 2003, but more than 115,000 computer software engineers found higher-paying jobs during that same period. Taxi drivers will usually try to avert this happening in traffic queues by moving slightly forward every 30 seconds or so. [3] Drezner also points out that large software companies such as Microsoft and Oracle have increased outsourcing and used the savings for investment and larger domestic payrolls. 3, which is approximately 50pence, or 1 USD), and are charged by distance, although if the cab stops for more than 1 minute, 1/2 a Dirham will be added to the meter.

Professor Drezner reports that for every dollar spent on outsourcing to India, the United States reaps between $1.12 and $1.14 in benefits. Prices are reasonable (the meter begins as Dhs. That in turn makes us all richer.” [2]. Some of the private cab companies are Cars Taxi, National Taxi, Cititaxi and Metro Taxi. ‘Creative destruction’ is a discovery process where we find ways to produce goods and services more cheaply. The Dubai Transport Corporation operates cream-colored taxis. The automobile cost the jobs of people who took care of horses or made saddles, carriages, and horseshoes.” [1] Walter Williams, another economist, said “we could probably think of hundreds of jobs that either don't exist or exist in far fewer numbers than in the past--jobs such as elevator operator, TV repairman and coal deliveryman. There are both government-operated and private cab companies.

Economist Thomas Sowell from the University of Chicago said “anything that increases economic efficiency--whether by outsourcing or a hundred other things--is likely to cost somebody's job. Dubai also has an extensive taxi system, by far the most frequently used means of public transport within the emirate. Because outsourcing allows for lower costs, even if quality reduces slightly or not at all, productivity increases, which benefits the economy on aggregate. Due to the frequency of such incidents, road networks are blocked and held up quite frequently. the firm is trying to maximize the quality of its product given cost (its productivity). Furthermore, Dubai has developed a reputation for having the most number of deaths and road accidents in the developed world clocking in with a statistic of having a minor road accident at least every 3 minutes. A firm's motivation for replacing workers with machines is identical to the motivation for outsourcing, i.e. Traffic congestion has come about mainly due to lack of foresight on the recent rapid population increase, the relative ease of credit facilities for obtaining a car and the convoluted road networks that are constantly being changed, improved or reconstructed.

Some economists suggest that government training programs be provided. Unfortunately though, the bus network is used extensively by lower income groups and does not do enough to attract higher income earners who would do well to use the bus transport system and ease traffic congestion that has recently become a major problem in Dubai and the United Arab Emirates. However, economists do concede that labor is not always perfectly mobile and that some workers may have difficulty getting new jobs. There are also several discounts and period pass options available. Some argue that greater profits to the labor owners lead to higher consumption, which leads to further job creation, allowing those who lost jobs to gain jobs in other sectors of the economy. The government has issued plastic, swipable "e-go" cards. Although workers’ jobs were lost from this replacement of workers with machines, the Ford Motor Company made more money by lowering costs (or increasing quality, thereby increasing revenue). The bus system has 59 unique routes on weekdays and transports over 200,000 people each week.

Economists argue that machines on the car assembly line must have a higher quality to cost ratio than workers because, if they didn’t, there would be no incentive for the firm to replace workers with machines. Dubai has a fairly large bus system run by the Dubai Municipality. Today these workers are replaced by machines because they are cheaper in the long run, produce better quality products, or a combination of both (the firm is trying to increase its quality to cost ratio, quality being defined by the consumer and inferred from revenue). Although initially intended as a predominantly cargo airport, plans are afoot for the new Jebel Ali airport to handle some 120 million passengers per annum within 20 years, the largest capacity in the world, surpassing London's Heathrow's 85 million. American Motor Company Ford relied heavily on workers in the past to assemble car parts. A second airport located at Jebel Ali—and a new free trade area within Dubai, marking the centrepiece of the Jebel Ali Airport City—was announced in 2004 and construction began in January 2005. Some economists have argued that outsourcing is a form of technological innovation analogous to machines on a car assembly line. When completed this will double the capacity of the airport.

That many large businesses outsource and continue to outsource suggests that in many cases outsourcing is successful in that it increases product quality, lowers costs substantially, or both. The new terminal will be dedicated to Emirates airlines and will fully support the Airbus A380. Proponents of outsourcing believe that arguing that outsourcing leads to lower product quality is pointless because if it were true, consumer demand will force firms to shift back to producing the good or service in-firm rather than out-firm. A third terminal is currently under construction and due to open in 2006. If the company does it correctly, it benefits from higher profits. Dubai airport has won many awards for its excellence in design and services. The decision to outsource is like the decision to expand a business overseas, to incorporate computer technology, or to hire new workers. Dubai International Airport is a fortress hub for Emirates airlines and has a large Duty Free shopping centre.

Critics of outsourcing often talk about outsourcing failures without mentioning instances of outsourcing success. Dubai is serviced by several commercial ports and Dubai Creek is still used by local traders in Dhows:. The decision to outsource is like any other business investment decision in that there is risk. The emirate discovered that stamp collectors were willing to give it money for colored labels with "Dubai" printed on them, and by the time the postal system was merged with those of other emirates in mid-1972, it had issued over 400 stamps, few of which ever saw usage on mail. In fact, many American companies like Dell have moved customer service divisions back to America as a result of poor quality [2]. This was the opening salvo of a barrage of stamp issues over the next few years. But the outsourcing firm has freedom to move a firm department or division back home if its profits are suffering as a result of poor quality. The Dubai Post Department took over the postal service on June 14, 1963 and the following day issued a series of stamps depicting sea life, views of Dubai, and Sheikh Maktoum bin Rashid Al Maktoum.

One criticism of outsourcing is that product quality suffers. Despite the name, these were only on sale in Dubai's post office. [1]. When Pakistan came into existance, the British government set up a postal administration for Eastern Arabia and used overprinted British stamps until January 7, 1961, when Dubai issued its own stamps inscribed "Trucial States". A recent poll of economists by the Wall Street Journal found that only 16 % of them saw outsourcing as having a significant impact on the overall job picture. It used the stamps of India on mail, with postmark "Dubai Persian Gulf", until India's independence in 1947, then stamps of Pakistan until March 31, 1948. "Offshoring”, on the other hand, represents a relocation of an organizational function to a foreign country, not necessarily a transformation of internal organizational control. A post office of British India was opened August 19, 1909.

In short, “outsourcing” means sharing organizational control with another organization, or a process of establishing network relations within an organizational field. See the Dubai Department of Tourism and Commerce Marketing's list of developments [10] in Dubai for more information. “Offshoring”, in contrast, represents the transfer of an organizational function to another country, regardless of whether the work stays in the corporation or not. Dubai interests have also purchased large amounts of real estate in foreign countries, in particular snapping up trophy properties in global centers like New York and London; a typical purchase in 2005 was New York's 230 Park Avenue (formerly known as the New York Central Building or the Helmsley Building) and Essex House on Central Park South. When this third party is located in another country the term “offshore outsourcing” makes more sense. Iranian expatriates alone are estimated to have invested up to $US 200 Billion in Dubai.[9]. To be consistent, “outsourcing”, in corporate context, represents an organizational practice that involves the transfer of an organizational function to a third party. Immigrants have been pouring capital into Dubai in the past several years, greatly contributing to the city's prosperity.

Note that “outsourcing”, “offshore outsourcing” and “offshoring” are used interchangeably in public discourse despite important technical differences. This project was launched in 2003 and is estimated to be completed by 2006. In some cases, the agents are not allowed to even give out their real name. The International Media Production Zone is a project targeted at creating a hub for printers, publishers, media production companies, and related industry segments. The agents were often not able to tell the customer they did not actually directly work for the original manufacturer. The aim of this park is to foster the growth of this sector in Dubai and to utilize the region's talent in addressing this rapidly growing sector. These agents generally worked in call centers where the information needed to assist the calling customer was indexed in a computer system. This is a new park to be targeted at Biotech companies working in pharma, medical fields, genetic research and even biodefense.

In some cases these companies hired technical writers to simplify the usage instructions of their products, index the key points of information and contracted with temporary employment agencies to find, train and hire generally low-skilled workers to answer their telephone technical support and customer service calls. Dubai has also launched Dubiotech. The term "outsourcing" became more well known largely because of a growth in the number of high-tech companies in the early 1990s that were often not large enough to be able to easily maintain large customer service departments of their own. It will also contain Al Burj, another one of the tallest buildings in the world. This usually involves continued direct or indirect management and decision-making by the client of the out-tasking business. Dubai Waterfront will be a mix of canals and islands full of hotels and residential areas that will add 500 miles of man-made waterfront. A related term is out-tasking: turning over a narrowly-defined segment of business to another business, typically on an annual contract, or sometimes a shorter one. In February 2005, Dubai Waterfront was announced, it will be 2½ times the size of Washington D.C., the size of the island of Manhattan.

Many companies, most notably Dell and AT&T Wireless, have gained significant negative publicity for their decisions to use non-US labor for customer service and technical support; one of the most prominent complaints being the expectation that the replacement staff will have more trouble communicating with customers. It is expected to be completed in 2008. Due to this demand call centers have sprung up in Canada, China, Eastern Europe, India, Israel, Ireland, Pakistan, Philippines and even the Caribbean. Emaar Properties is currently constructing what will become the world's tallest building, the Burj Dubai. The logical extension of these decisions was of outsourcing labor overseas to countries with lower labor costs, this trend is often referred to as offshoring of customer service. The city has modern skyscrapers such as Emirates Towers, which are the 12th and 24th tallest buildings in the world[8], and the Burj al-Arab located on the Persian Gulf and is currently the tallest hotel in the world. The overhead costs of customer service are typically less where outsourcing has been used, leading to many companies, from utilities to manufacturers, closing their in-house customer relations departments and outsourcing their customer service to third party call centers. Somewhere from 2005 to 2006, most of the freehold skyscrapers and other villa projects will be ready for occupancy.

Outsourcing business is characterized by expertise not inherent to the core of the client organization. The first villa freehold properties that were occupied by non-UAE nationals were The Meadows, The Springs, and The Lakes (upper-class neighborhoods designed by Emaar Properties, collectively called Emirates Hills). Many companies also outsource customer support and call center functions, manufacturing and engineering. Dubai's land-reclamation projects — the Palm Islands of Jumeira, Jebel Ali, and Deira and The World archipelago — will be the world's largest artificial island complexes, developed with villas, golf courses, and holiday resorts. Business segments typically outsourced include Information Technology, Human Resources, Facilities and Real Estate Management and Accounting. Corporate office enclaves on Sheikh Zayed road were developed to shift Dubai's traditional business area from the Dubai creek to the western parts of the city. Many companies look to employ expert organizations in the areas targeted for outsourcing. The government's decision to diversify from a trade-based but oil-reliant economy to one that is service- and tourism-oriented has made real estate more valuable, and corporations such as Emaar Properties, and Nakheel have benefited.

In theory, this business segment should not be mission-critical, but practice often dictates otherwise. Despite the relatively early closing time of 3am for these clubs, their trade is brisk. Organizations that deliver such services feel that outsourcing requires the turning over of management responsibility for running a segment of business. Besides the obvious presence of prostitutes, however, Dubai also has a lively and well-known nightlife, with many state-of-the-art nightclubs and bars being strewed in all areas of the Emirate, mainly joined to hotels (properties not adjoined to hotels are not allowed to serve alcohol). Outsourcing always involves a considerable degree of two-way information exchange, co-ordination, and trust. A large population of prostitutes work in Dubai, spurred on by the large amount of tourism [7]. Likewise, buying services from a provider is not necessarily outsourcing or out-tasking. [6].

Buying products from another entity is not outsourcing or out-tasking, but merely a vendor relationship. Through subsequent revisions, the master planned development will span over 3 billion square feet (300,000,000 m²) with the 1st phase to be completed in 2008. Outsourcing and/or out-tasking involve transferring a significant amount of management control to the supplier. Dubailand, an entertainment city vaguely planned off the concept of Disneyland was launched in October 2003. Outsourcing is defined as the management and/or day-to-day execution of an entire business function by a third party service provider. Dubai currently has two waterparks in Wonderland and Wild Wadi with more being planned for Dubailand. . The World Cup is world's highest stakes horse race, with over US $15 million worth of prize money handed out.

EDS was the first company to establish the outsourcing business. Dubai hosts many world class sporting events, including the Dubai Tennis Open, Dubai Desert Golf Classic, and the Dubai World Cup, an annual horse racing event. Outsourcing became a popular buzzword in business and management in the 1990s. Soon to overtake the Mall of Emirates as the world's largest will be the Dubai Mall, part of the Burj Dubai development that will be home to the tallest building in the world when completed. Offshoring is similar to outsourcing when companies hire overseas subcontractors, but differs when companies transfer work to the same company in another country. Two more shopping malls have recently opened, the Mall of Emirates, the third largest mall in the world, which also has the world's third largest indoor ski slope, and the Ibn Battuta Mall. A related term, offshoring, means transferring work to another country, typically overseas. The Oasis Centre caught fire and received major damage on 9 September 2005.

Outsourcing is a business decision that is often made to lower costs or focus on core competences. The city has many malls such as City Centre, Lamcy Plaza, Al Ghurair City, Mercato Mall, Oasis Centre and Wafi Centre that have international stores, theaters, gaming arcades, and food courts. Outsourcing (or contracting out) is often defined as the delegation of non-core operations or jobs from internal production within a business to an external entity (such as a subcontractor) that specializes in that operation. Other, smaller shopping festivals, such as "Dubai Summer Surprises" are held throughout the year. ^  "Outsourcing is the Kool" (kOOL PEOPLE). Attendance at the 2005 Festival topped 3.3 million visitors. 3. The annual month-long Dubai Shopping Festival (DSF) draws shoppers from the Indian subcontinent and around the world.

^  Should we “Save Jobs”? by Walter Williams. Some of these universities include the American University in Dubai (AUD),The American College of Dubai, Al Ghurair University, Birla Institute of Technology and Science, Middlesex University, Dubai, Dubai Women's College, University of Wollongong in Dubai, and Zayed University. 2. However, a sizable number of foreign accredited universities have been set up in the city over the last ten years. ^  “Outsourcing” and “Saving Jobs” by Thomas Sowell. Many expatriates tend to send their children back to their home country for university education. 1. There are also some primary and high schools that offer Canadian and Japanese syllabuses.

Universities in the European Union granted 40 % more science and engineering doctorates than the United States, with that figure expected to reach nearly 100 % by about 2010 according to Freeman's paper. ASD offers an accredited American high school diploma; DAA offers both an American-accredited high school diploma and the International Baccalaureate [IB] diploma. were in science and engineering compared with a world average of 27 % and 52 % in China. The American School of Dubai (ASD), which is located in Jumeirah, and Dubai American Academy (DAA) have been around the longest. He found that in the year 2000, 17 % of university bachelor degrees in the U.S. A growing number of K-12 schools offer the American syllabus. ^  This view is borne out by a recent study by Richard Freeman at the National Bureau of Economic Research in Washington. The International School of Choueifat and Emirates International offer both British and American curricula.

The Emirates International School, Al Diyafah High School and Cambridge International High School are also secondary schools that offer a combination of GCSE, IGCSE, and IB courses to the expatriate community. Mary's High School, Dubai College, English College, and Jumeirah College are all British style eleven-to-eighteen secondary schools which offer GCSE and A-Levels. St. Modern Renaissance School, the Horizon School, Dubai English Speaking School, Jumeirah Primary School, Jumeirah English Speaking School, and Jebel Ali Primary School all offer British style primary education to the age of eleven.

Our Own English High School, Modern High School, and Indian High School offer either a CBSE or an ICSE Indian syllabus. Most schools cater to one or more expatriate communities. Some primary schools conduct entrance tests. Annual fees for nursery and pre-school vary greatly.

English is the medium of instruction in most schools in Dubai. Christian churches are permitted to openly advertise certain church functions, such as memorial services, in the press. However, they are permitted to raise money from among their congregants and to receive financial support from abroad. Apart from donated land for the construction of churches and other religious facilities, including cemeteries, non-Muslim groups are not supported financially or subsidised by the government.

Mary's) would begin at the end of 2005, members of the Eastern Orthodox Christian community in the UAE have had to use churches of other denominations for services, until General Sheikh Mohammad Bin Rashid Al Maktoum, Dubai Crown Prince and UAE Defence Minister, donated a plot of land in Jebel Ali. Construction on the first Greek Orthodox Church in Dubai (to be called St. In early 2001, ground was broken for the construction of several additional churches on a parcel of land in Jebel Ali donated by the government of Dubai for four Protestant congregations and a Catholic congregation. The government follows a policy of tolerance towards non-Muslims and Polytheist; in practice, interferes very little in the religious activities of non-Muslims.

Non-Muslims in the country are free to practice their religion but may not proselytize publicly or distribute religious literature. There is an electric crematorium run by a group of Indian expatriates. Both are believed to be sanctioned by the late ruler of Dubai, Sheikh Rashid Bin Saeed Al Maktoum. The Meena Bazaar area of the city has both a Shiva and Krishna temple.

Dubai is the only emirate that has Hindu temples and a Sikh gurudwara. There are foreign minority Hindus, Sikhs, and Christians as well. A vast majority of the locals are Sunnis. Islam is the official religion of all of the emirates.

The official language is Arabic, but English and Urdu are also widely spoken, along with Hindi, Persian, Punjabi, Malayalam, and Tagalog. The Federal Government is still formulating laws pertaining to ownership of property and considering issuing residency status to those who own such property. Ownership of lease does not guarantee any form of legal residency status in the UAE. It is, however, illegal to seek employment on this visa.

The "lease" on these freehold properties was first offered for 99 years but was later changed to permanent ownership. There is an increasing number of "freehold" villas and flats on artificial islands such as the Palm Islands. The numerous free trade zones allow for full expatriate ownership. Nearly all of the commercial establishments are run by expatriates with a silent local partner who merely "rents" the business license for a negotiated annual fee without taking part in any capital investment.

A quarter of the population reportedly trace their origins to neighboring Iran.[5] The UAE government does not allow any form of naturalization or permanent residence to expatriates. The vast majority of these expatriates come from South Asia and the South East Asia. Dubai is unusual in that its population comprises mainly expatriates, with UAE nationals (Emiratis) constituting the minority. Dubai Knowledge Village (KV) is an education and training hub is also set up to complement the Free Zone’s other two clusters, Dubai Internet City and Dubai Media City, by providing the facilities to train the clusters' future knowledge workers.

Dubai Internet City, now combined with Dubai Media City as part of TECOM (Dubai Technology, Electronic Commerce and Media Free Zone Authority) is one such enclave whose members include IT firms such as EMC Corporation, Oracle, Microsoft, and IBM, and media organisations such as MBC, CNN, Reuters, ARY and AP. The government has set up industry-specific free zones throughout the city. Dubai is also diversifying as a hub for service-based industries such as IT and finance, with the new Dubai International Financial Centre (DIFC). Today, Dubai is also an important tourist destination, bolstered by its rapidly-expanding airline Emirates, which is headed by Sheikh Ahmed bin Saeed Al Maktoum, an uncle of the Sheikh.

Oil reserves in Dubai are less than one-twentieth that of the emirate of Abu Dhabi, and hence oil income is a minor contributing factor to the city's prosperity. The city of Dubai has a free trade in gold and till the 90s was the hub of a "brisk smuggling trade" of gold ingots to India, where gold import was restricted (read the novel Dubai by Robin Moore). Most of the new city's banking and financial centers were headquartered in this area. Dubai and its twin across the Dubai creek, Deira (independent at that time), became important ports of call for Western manufacturers.

Dubai maintained its importance as a trade route through the 1970s and 1980s. In 1973, Dubai joined the other emirates to adopt a single, uniform currency: the UAE dirham. On 2 December 1971 Dubai, together with Abu Dhabi, and five other emirates, formed the United Arab Emirates after Britain left the Persian Gulf in 1971. Oil was discovered 120 kilometres off the coast of Dubai, after which the town granted oil concessions.

After the devaluation of the Gulf Rupee in 1966, Dubai joined the newly independent state of Qatar to set up a new monetary unit, the Qatar/Dubai riyal. Until the 1930s, the town was known for its pearl exports. The town of Dubai was an important port of call for foreign tradesmen (chiefly Indians), who settled in the town. The rulers of Dubai fostered trade and commerce, unlike the town's neighbors.

In March 1892 the Trucial States (or Trucial Oman) were created. Like four of its neighbours, Abu Dhabi, Ras al-Khaimah, Sharjah and Umm al-Qaiwain, its position on the route to India made it an important location. Dubai came under the protection of the United Kingdom (keeping out the Ottoman Turks) by the Exclusive Agreement of 1892. In 1835, Dubai and the rest of the Trucial States signed a maritime truce with Britain and a "Perpetual Maritime Truce" about two decades later.

An attempt by the Qawasim pirates to take over Dubai was thwarted. From that point on, Dubai, a newly independent emirate, was constantly at odds with the emirate of Abu Dhabi. In 1833, the Al Maktoum dynasty of the Bani Yas tribe left the settlement of Abu Dhabi and took over the town of Dubai, "without resistance". On 8 Jan 1820 the then sheikh of Dubai was a signatory to the British sponsored "General Treaty of Peace" (the General Maritime Treaty).

Earlier in the 18th century the Al Abu Falasa lineage of Bani Yas clan established itself in Dubai which was a dependent of the settlement of Abu Dhabi until 1833. There are records of the town of Dubai from 1799. . A majority of the emirate's revenues are from the Jebel Ali Free Zone (JAFZ) [4] and now, increasingly, from tourism.

Dubai is distinct from other members of the UAE in that revenues from oil account for only 6% of its gross domestic product. The town of Hatta is an exclave of the emirate of Dubai and borders Al Wajajah, Oman. The emirate is located on the Persian Gulf, southwest of Sharjah and northeast of Abu Dhabi, and reaches into the interior. Dubai is the second largest emirate in the federation after Abu Dhabi.

Sheikh Mohammed bin Rashid Al Maktoum, who was earlier the crown prince of Dubai is one of the Sheikh's younger brothers. The new Ruler who is also the Vice-President and the Prime Minister of the UAE is H.H. Sheikh Maktoum bin Rashid Al Maktoum, who was also the Vice-President of the federation of the United Arab Emirates. The ruler of Dubai was the late H.H.

Dubai or Dubayy (in Arabic: دبيّ, IPA /ðʊ'bɪ/, generally /dʊ'baɪ/ in English) refers to either. Published: December 4, 2005. FATTAH. ^  "Young Iranians Follow Dreams to Dubai." The New York Times, by HASSAN M.

Jebel Ali. Mina' Rashid. 1949). 4 Jan 2006 - Present Sheikh Mohammed bin Rashid Al Maktoum (b.

2006). 1943 - d. 7 Oct 1990 - 4 Jan 2006 Sheikh Maktoum III ibn Rashid Al Maktoum (b. 1990).

1912 - d. Sep 1958 - 7 Oct 1990 Sheikh Rashid II ibn Said Al Maktoum (b. 18 April 1929 - Sep 1958 Sheikh Said II ibn Maktoum (2nd time) (s.a.). 15 April 1929 - 18 April 1929 Sheikh Mani ibn Rashid.

1958). 1878 - d. Nov 1912 - 15 April 1929 Sheikh Said II ibn Maktoum (1st time) (b. 1912).

1851 - d. 16 Feb 1906 - Nov 1912 Sheikh Bati ibn Suhayl (b. 1906). - d.

18. 7 April 1894 - 16 Feb 1906 Sheikh Maktoum II ibn Hushur (b. 1894). 22 Nov 1886 - 7 April 1894 Sheikh Rashid I ibn Maktoum (d.

1886). 1859 - 22 Nov 1886 Sheikh Hushur ibn Maktoum (d. 1859). 1852 - 1859 Sheikh Said I ibn Bati (d.

1852). 9 June 1833 - 1852 Sheikh Maktoum I ibn Bati ibn Suhayl (d. - 9 June 1833 Sheikh `Ubayd ibn Said. ...

that emirate's main city, sometimes called "Dubai City" to distinguish it from the emirate. one of the seven emirates that make up the United Arab Emirates on the Arabian Peninsula, or.

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