1. Anıl Sural
Graduation Thesis
Advisor: Prof. Dr. Mustafa Kibaroğlu

2. Introduction
Is Outsourcing Exploitation or Chance for Developing Countries?
Anıl Sural
2

3. Globalization is a concept that
emerged all around the world in
the last twenty years. There are five
dimensions for globalization. Those
are economic dimension, political /
security dimension ,technological/
communicative dimension,
environmental / demographic
dimension and cultural dimension.
Especially it means the world
becomes a single market. After all
liberalization started, it means no
strict trade border for countries.
Is Outsourcing Exploitation or Chance for Developing Countries?
Anıl Sural
3

4. Multinational corporations are the dominant providers in China's high-end market.
US multinational companies choose China for manufacturing side. First of all,
labor costs are cheaper when you consider US or Europe. And when they have
manufacturing, it is easy to enter domestic market. When they enter, China it
means you can go Asia markets.
Raw materials in China are cheaper than US. Supply chain and logistics activities
are easier then US. These all drive down operating expenses. High population is
problem for China. Because when population increases, wage will decrease. There
is opposite equation.
Is Outsourcing Exploitation or Chance for Developing Countries?
Anıl Sural
4

5. What is Outsourcing?
Is Outsourcing Exploitation or Chance for Developing Countries?
Anıl Sural
5

6. Outsourcing means using international
cheap labor force and also doing in the
countries with cheapest sources of labor
and supplies. Some of the companies
transfer their internal activities and
decision rights of action to outside
suppliers or companies.
Outsourcing is a situation in which a
company employs another organization
to do some of its work, rather than
using its own employees to do it.
Is Outsourcing Exploitation or Chance for Developing Countries?
Anıl Sural
6

7. The main areas in which a business can be effective except outsourcing are
finance, human resources, accounting, legal and administrative procedures,
external resources, delegating activities. Thus they can save time and resources
which provide a great extent. However, the costs are pulled down. Basic
manufacturing directing labor costs today range from less than $1 per hour in an
emerging country to $6 to $12 per hour in a developed country. In certain U.S.
industries, direct labor costs in manufacturing exceed $20 per hour without
benefits.
Is Outsourcing Exploitation or Chance for Developing Countries?
Anıl Sural
7

8. Top 10 Outsource Countries
1. India
2. Indonesia
3. Estonia
4. Singapore
5. China
6. Bulgaria
7. Philippines
8. Thailand
9. Lithuania
10. Malaysia
*Source: http://www.sourcingline.com/top-outsourcing-countries
Is Outsourcing Exploitation or Chance for Developing Countries?
Anıl Sural
8

9. There are many positive and negative aspects of outsourcing. When we look
at the other side, there are negative impacts for workers. Workers are
disenfranchisement and lack of good working conditions. Moreover, their
gain would highly decrease. Businesses outsource their core competencies
towards the activities of the remaining cost of the cost savings provided was
asked. They have reached their goals in providing only save money. Improving
the quality of product or service, entering the larger markets, and increasing the
number of customers of other businesses are targets.
Is Outsourcing Exploitation or Chance for Developing Countries?
Anıl Sural
9

10. Outsourcing from China Side
Is Outsourcing Exploitation or Chance for Developing Countries?
Anıl Sural
10

11. The world's second largest economy is Chinese economy. Argued that the
protection of the country's 2020 growth of 7.5 per cent. In addition, large
fluctuations in economic performance for the lack of maintenance of stable
economic growth and inflation must be kept under control with the prevention and
invisible risks.
Recently, China has witnessed an intense debate about whether there can be
an alternative to the United States or not. In the unipolar world, China is discussed
in whether there will be a second pole.
Is Outsourcing Exploitation or Chance for Developing Countries?
Anıl Sural
11

12. Multinational corporations are the dominant providers in China's high-end market.
In addition, due to China's abundant low-cost human capital and infrastructure,
some have set up their global service-outsourcing bases here to provide support
and services for other countries. Multi-national companies have invested in China
which has positive impact on this country. It increased productivity and social
security on labor market. China's economy has provided a high added value. In
addition these improve cities’ values. China learns now how produce, supply chain
and logistics management.
Is Outsourcing Exploitation or Chance for Developing Countries?
Anıl Sural
12

13. The Chinese government views an outsourcing arrangement as a pioneer in
attracting demand and the preferred mode to provide access to technologies
into the Chinese market. For foreign companies, like ‘’price''; economic platform
that accelerates the introduction of new technologies, large internal funds and
investment and a means to accelerate their based on the state of the economy
and the transition to a mixed effect '' benchmark'' to direct resources into strategic
industry guidance are important.
Is Outsourcing Exploitation or Chance for Developing Countries?
Anıl Sural
13

14. Outsourcing Workers
Conditions in China
Is Outsourcing Exploitation or Chance for Developing Countries?
Anıl Sural
14

15. High population is the one of the biggest
problem for China, as well as being a
major source of economic power. The
participation of about seventy million
people in the next ten years, the labor
force is envisaged.
One of the biggest obstacles standing in
the way of China's development is to meet
the needs of thispopulation and to cope
with lack of infrastructure. Heavy
investments are made in order to remedy
this shortcoming.
Is Outsourcing Exploitation or Chance for Developing Countries?
Anıl Sural
15

16. Apple originally from California, United States and they created or supported nearly
600,000 jobs for U.S. They do not manufacture in United States. They use global
outsourcing and Foxconn manufacture for Apple in China. And in 2012, Apple is an
independent consulting firm to appoint an audit for Foxconn working conditions.
These workers make about 51 cents an hour. It should be noted that Apple's Foxconn
workers are used to work longer hours, as much as 70 hours a week. Apple mandated
that the maximum overtime should be 20 hours a week, so Foxconn workers now
only work 60 hours a week.
Is Outsourcing Exploitation or Chance for Developing Countries?
Anıl Sural
16

17. Also in dormitory condition, many people live in the one room. Most of the
workers were forced to work 12 hours a day standing, lack of payment for
overtime, preventive measures are not taken at the beginning of the business
emerged. Foxconn hired child employment and 14-year-old youth was run as an
intern on the factory. The minimum age limit of 16 in the factory was due to
Chinese labor law. 22 employees committed suicide because of working condition.
When they hire people, they will sign a contract and it is written: I will not commit
suicide.
Is Outsourcing Exploitation or Chance for Developing Countries?
Anıl Sural
17

18. How does United States see
outsourcing?
Is Outsourcing Exploitation or Chance for Developing Countries?
Anıl Sural
18

19. Dynamic and powerful determinant of the
economic structure of the U.S. economy
is the functioning of the market actors.
United States of America is the world's
largest economy and the most important
industrial center. 70% of production and
services are provided by the private
sector.
US companies affect US Economy
directly and they have quite good impact.
Actually US firms have an impact all
over the world economy. US are the
world's largest energy producer, consumer
and importer. They have rich natural
resources and they fired skilled labor.
Is Outsourcing Exploitation or Chance for Developing Countries?
Anıl Sural
19

20. U.S. firms use global outsourcing for manufacturing activities. Because they want
to decrease cost, especially labor cost. Globalization has affected all over the
world and developed countries want to use developing countries’ cheap labor, raw
materials, energy, and so on.
They have begun to take advantage of more opportunities. Multinational US
companies use developing countries for production in due to lower costs by
performing these countries managed to establish a more efficient value chains.
Is Outsourcing Exploitation or Chance for Developing Countries?
Anıl Sural
20

21. Reasons for the production of the iPhone in China. A very large amount of glass used
in the display can be combined together and the fact that China is coming soon.
Apple founder and former CEO Steve Jobs, the iPhone, before placing the product on
the market to have a glass screen, and asked to be produced in large quantities within
six weeks. This can only be achieved by China.
Another reason why Apple chose China for production is flexibility, size and
efficiency. Earlier time Chinese manufacturer with a vast experience in
manufacturing electronic controls and the tight bandwidth limitations in the United
States were more flexible and efficient.
Is Outsourcing Exploitation or Chance for Developing Countries?
Anıl Sural
21

22. Insourcing American Jobs
Is Outsourcing Exploitation or Chance for Developing Countries?
Anıl Sural
22

23. President Obama Hosts "Insourcing American Jobs" Forum at the White House in
2012. The purpose of the forum is the opportunity to produce more cheaply abroad
to "outsource" the U.S. production has been re-take the country. United States Global
firms outsource for 3 E. These are efficiency, effectiveness and economy. This 3 E
perspective: companies are inefficient or if outsourcing is a more efficient all the
work to make this resource it is outsourcing.
Is Outsourcing Exploitation or Chance for Developing Countries?
Anıl Sural
23

24. United States of America president is Barack
Obama had an important speech on January
07, 2012. This message from Obama:
‘’ I don’t want America to be a nation that’s
primarily known for financial speculation and
racking up debt buying stuff from other nations.
I want us to be known for making and selling
products all over the world stamped with three
proud words: “Made in America.” And we
can make that happen.
I don’t want the next generation of manufacturing
jobs taking root in countries like China or
Germany. I want them taking root in places like
Michigan and Ohio and Virginia and North
Carolina. And that’s a race that America can
win. ‘’
Is Outsourcing Exploitation or Chance for Developing Countries?
Anıl Sural
24

25. Outsourcing and Global Outsourcing are different two terms. One of them is
domestic. US companies can use outsourcing for their firm and they use labor
force for decreasing labor cost and want professional skill worker. It does not
decrease or increase domestic market so it does not affect unemployment rate.
120,000
employees
work for
Apple in
China
Is Outsourcing Exploitation or Chance for Developing Countries?
Anıl Sural
25

26. Conclusion
Is Outsourcing Exploitation or Chance for Developing Countries?
Anıl Sural
26

27. When we focus on Apple case, first of
all, we can see two important countries.
These are world’s largest economy. One
of them is United States and other side is
a candidate for biggest economy: People's
Republic of China.
United States does not want to produce.
They see manufacturing like errand. China
has potential for manufacturing and their
labor costs are cheaper than U.S. China is
glad to be outsource for other companies.
Because it is opportunity for China. They
do not have information technology for
generating new knowledge. China learns
manufacturing, supplying chain, knowing
how, logistics etc.
Is Outsourcing Exploitation or Chance for Developing Countries?
Anıl Sural
27

28. China has capacity and force for produce and earns money from U.S. On the
other hand, problems are starting for people. Americans loss their job and their
unemployment rate increase. They cannot find job. Chinese people do not have
problem for finding a job but they earn less money and their working conditions
are hard. Third parties are companies. Entrepreneurs are happy both countries.
American businessmen make more profit than Chinese entrepreneurs and Chinese
businessmen work for global multinational companies and earn money.
Is Outsourcing Exploitation or Chance for Developing Countries?
Anıl Sural
28

29. Anıl Sural
anilsural@gmail.com
slideshare.net/anilsural
linkedin.com/in/anilsural
twitter.com/anilsural
Is Outsourcing Exploitation or Chance for Developing Countries?
Anıl Sural
29