Political Science

On February 11th  2010, the Wall Street Journal announced that Fundquest, an international advisor technology platform, agreed to outsource a fraction of its back-office and operations to Envestnet,  both are financial platform-based companies. Even though the majority of these corporate offices reside in the United States, both firms have offices overseas then decide to outsource to each other. This creates an interesting dilemma between both corporate firms and their employees that are looking to cut costs, keep jobs and expand in this global economic environment that we are in now.

James Fox, FundQuests chief executive, says in the press release that it was because their company was growing and the outreach was to help create additional products and new investment business solutions to investment advisors.  A source close to the firm described this merger of solutions to include, account initiation, trading and reconciliation, custodial data processing and performance reporting. The goal is to decrease overhead costs of running the account platforms by 10 basis points. (Note a basis point is 1100th of a point). If Fundquest has about 40 billion in manageable assets and Envestnet has about 89 billion, these can add up to a hefty sum in future savings. (Fundquest, WSJ).

On the other side of the spectrum, we dont always see mergers and outsourcers as a positive event in the global marketplace. We see jobs being lost to lower economic demand and jobs lost to someone that is willing to work for less in third world countries, which have resulted in a decrease in value of customer service that customers expect from their investments. On the other hand, we see firms can simultaneously outsource to each other and outsource overseas, as a goal to increase demand and efficiency for their customers.

According to BBC News, sourcing the CIPD, the Chartered Institute of Personnel and Development, reported the employment forecast has worsened as 2.46 million people are now unemployed in the UK.  The CIPDs survey of more than 700 employers found that firms in all sectors plan to cut 6.2 of their workforce in the first three months of 2010, compared with 3.8 in the previous quarter.

However, the private sector was expected to grow back faster than the public sector, which unemployment hit hard in defense and public administration. This trend included forecasts that 1 in 10 information technology jobs will be outsourced to India or Eastern Europe this year. (UK Jobs, BBC News).

Third World countries, such as India, have deficit problems of their own, along with food inflation, poverty, hyper-active growth and frequent natural disasters that damage their own crops. The government says it needs annual growth of 9.0 to 10.0 percent to make a meaningful impact on Indias widespread poverty, with a fast-expanding economy required to generate jobs. (India, AFP) Comparatively, with the standard of living from a first world to a third world country, there may are benefits of outsourcing. Even though there has to be a significant record of growth for these countries to catch up to the level of production of its predecessors.

Overall, we assume that the costs and benefits of outsourcing, economic cycles are supposed to stabilize in the long run in a fair and balanced market. Consumer confidence moves along as businesses rise and fall within the realm of supply and demand. The global arena presents a wave of competition and opportunity as we strive to make the most profits, hire and keep the most talented employees while developing the most advanced technologies.  Political stability plays a huge role in stabilizing the role of a country by helping prevent huge swings in economic changes. Our president urged reform to protect our scientists and engineers from global technical competitors.  He said, Because we know that the country that out-educates us today is going to out-compete us tomorrow.

And we dont want that future for our young people. Were not going to sentence them to a lifetime of lower wages and unfulfilled dreams.  (Obama, Times of India).