Although corporate globalization might, on the surface, seem like a really good idea to reduce labor and therefore production costs, in reality, it doesn’t always work out to plan and there can be more problems with corporate globalization than anticipated.

The largest single cost for many companies is the workforce. Wages make up the bulk of the expenses necessary for running a company, so, as profit margins reduce and these companies need to reduce their overheads, it stands to reason that one of the first things they do is to seek out the cheapest workforce possible. One of the main problems with this, (apart from the workforce being made redundant in the original country of origin), is that very often the environments which promote cheap labor do not actually pay the workers enough money to live on. If the nation and human rights campaigners then catch wind of this and try to improve the working conditions, which would increase costs to the company again, guess what? They just pick up and move somewhere else. Unfortunately there’s always somebody else willing to take a chance with the promise of regular work.

Corporate Globalization and Off-Shoring

Outsourcing labor, or ‘off-shoring’ as it is often referred to, is simply transferring jobs between countries in an effort to reduce costs. One great area for consternation in recent years has been the outsourcing of call centers, and to a certain extent this is now being addressed by many corporations as people are rebelling heavily against it. We all know the sort of thing, trying to ring the local bank or service provider, only to be picked up by a call center somewhere in Pakistan where it is almost impossible to even decipher whether the person is actually speaking English, extremely frustrating to say the least. Some corporations are actually now feeling the need to almost boast in their advertisements that your call will be answered locally! Well, whoppee doo!

Problems with Corporate Globalization for the US

  1. Loss of jobs, especially in customer services
  2. Less control by the company over management issues
  3. Quality control problems – it is not always possible to replace the workforce with overseas workers who have the same level of education, experience and language skills
  4. Slower response times leaving customers feeling frustrated and angry
  5. Problems with understanding the accents of overseas agents – leaving customers feeling even more frustrated and angry
  6. Slow resolution times – everything just takes so much longer to sort out
  7. Overseas call centers simply unable to resolve the problems or produce desired results for customers – leaving customers feeling frustrated and angrier still
  8. Reduction in product sales – let’s face it, lots of the other problems have left customers feeling frustrated and angry so guess what – they’ll go elsewhere next time
  9. Unhappy customers, unhappy employees, unhappy employers.

So, basically, what might have seemed like a really good idea at the time, to reduce labor costs and increase productivity can very often have the exact opposite effect.

  • Share/Bookmark