Using located examples, analyse the importance of outsourcing for transnational corporations (TNCs).

“International migration is the main reason for the loss of distinctive local cultures.” Discuss this statement.

Outsourcing is when a company hands internal functions to an outside company (a client relationship), for example US/EU clothing companies outsource to Bangladesh; ICT outsourcing to Bangalore/Philippines; BP outsourcing of Gulf of Mexico oil rig operation to Halliburton; McDonald’s outsourcing the management of its restaurants to local companies in some states.

Outsourcing overlaps with foreign direct investment to a large extent if the TNC invests or has an ownership stake in the company it outsources to. There is considerable overlap between outsourcing and other forms of FDI (“offshore” branch plant construction) in terms of the important factors that drive these practices:

• cheap labour (and other low costs eg health and safety)
• low taxes (including use of Export Processing Zones/SEZs)
• local supplier’s ability to source cheap parts/materials or greater familiarity with market (glocalization).

These generic factors should be credited, even if the candidate’s link to proper outsourcing (as opposed to other forms of FDI) is insecure.

Good answers may show awareness that some companies may prefer to keep their operations in-house or may only outsource non-essential operations, or are beginning to “re-shore” operations to reduce supply chain risks (Japanese tsunami, disturbances in Ukraine, Nigeria, Kenya, etc). Another approach might be to analyse how some types/sectors of TNCs (mining operations, agribusinesses) may be less reliant on outsourcing than manufacturers and retailers with large and complex supply chains. Another approach might be to analyse how some TNCs, such as Amazon and Starbucks, have been criticized by the governments of sovereign states for the claim that they have “outsourced” operations to different subsidiaries of their own company (in an attempt to avoid corporation tax).

For band C, expect some description of the reasons why it is important for TNCs to have different operations/activities carried out in different places.

At band D, expect either more detailed explanation of why different operations/activities are carried out in different places or a good attempt to analyse why outsourcing is important for different TNCs.

By band E, expect both aspects to be addressed.

Credit all content in line with the markbands. Credit unexpected approaches wherever relevant.

The focus might be how a range of reasons/factors, including migration, helps explain the loss (or not) of distinctive local cultures. Likely reasons include internet/media, tourism, rising wages in emerging economies and elsewhere/changing employment structures. Credit physical reasons too, such as suggested climate change refugees (Tuvalu, Maldives).

Alternatively, candidates might discuss the extent to which migration brings loss/harm or benefits to the world’s many local cultures in both source and host regions for migration. Rather than addressing other factors, the discussion can encompass a range of ways in which migration and diaspora growth impacts on local cultures, including their preservation (the cultural “fossilization” of diaspora source nations, for instance).

Possible themes relating to migration and/or local culture include:

• migration, diaspora and multiculturalism [Guide 5]
• homogenous urban landscapes [Guide 4]
• tourism and the tourist gaze [Guide 5]
• cultural imperialism [Guide 5]
• global media and TNCs as agents of change [Guide 5 and 7]
• nationalist movements [Guide 6]
• isolationism [Guide 7].

Good answers may discuss what is meant by “loss”: culture comprises many traits, some of which may persist while others are lost or change. Another approach might be to discuss the emergence of new hybrid or “melting point” cultures eg in World Cities: these may replace previously homogenous cultures but they can be just as distinctive as the more homogenous
cultures that were found there before.

For band D, expect a structured discussion, the central elements of which are migration, local cultures and possibly some additional reasons/factors. This should include either a synthesis of several well evidenced themes taken from the subject guide, or nuanced and evidenced conclusion/evaluation of the statement.

At band E, expect both of these elements.

Outsourcing is a term that still causes confusion and was poorly understood by a surprising number of candidates. Typically, they used vague language, such as: “outsourcing is when a country uses the work force in another country”. Outsourcing is defined by the geography guide as “The concept of taking internal company functions and paying an outside firm to handle them. Outsourcing is done to save money, improve quality or free company resources for other activities.” Within the context of a geography examination paper (as opposed to business management), it may safely be assumed that a company which outsources its operations overseas becomes, by default, what we would term a TNC. The geography guide defines a TNC as “a firm that owns or controls productive operations in more than one country through foreign direct investment”. Significant global outsourcing relationships create a partnership (or global interaction) wherein both companies play a role in productive control. The client company may pay for training, or invest in the transfer of technology to the supplier company. The exam question also asked candidates to address the “importance” of the relationship for the Client Company, or TNC. Profitability was a key theme to explore here, linked with various low-cost factors of production. Well-developed examples were frequently supplied, usually Bangalore (call centres) or China (manufacturing). A few mentioned Bangladesh. Some of the best answers analysed the declining of outsourcing as a result of recent “reshoring” by risk-averse companies. Weaker candidates sometimes drifted off course and provided a lengthy cost-benefit analysis of outsourcing for India, rather than writing about the importance of outsourcing for companies.

The best answers were carefully structured around a range of possible factors, not just international migration, and used strong supporting evidence. Some of the strongest candidates offered a final substantiated judgment of whether migration is, or is not, the dominant factor. A minority of candidates misunderstood where the emphasis of the essay statement lies. They discussed whether migration was responsible for a loss, or gain, of culture. This approach was often hard to carry through and many floundered when it came to arguing coherently whether the presence of a diaspora community in a world city represents a loss, or gain, of “distinctive local cultures”.