By this contemporary time, outsourcing has become an inevitable trend in the global business and most of multinationals and entrepreneurs are attracted by its privileges. It has been contributing in global transformation of business as a new business strategy and jumped in international popularity since a decade. Although it is a broad phenomenon the objective of this essay is to describe the scope of outsourcing with its major advantages and disadvantages.
Outsourcing refers to a part of business operation or job function conducted by external vendor instead of mother company based on the principle of competitive or competitive advantages and division of labour. In other word, in most case company cannot manage its whole aspect of business function instantly at that time management allocates specific business task or responsibility to a specialist external service provider in exchange of a reasonable amount of money is called outsourcing. According to the Greaver " Outsourcing is the act of
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The renowned economist, Adam Smith, explained in his treatise The Wealth of Nations, "If a foreign country can supply us with a commodity cheaper than we ourselves can make it, it is better to buy it of them." In term of outsourcing business most of companies of developed countries like USA, UK, Germany, France, Japan are largely depending on relatively low wage countries such as India, China, Brazil, to name of few. In recent time, most of multinational company are emphasizing on outsourcing which trend will lead to turn into outsourcing industry in future. By considering this factor, it can be predicted that it is a potential sector for both developed and developing countries as it provides a win-win situation for both involving
Outsourcing is an important strategy that can help the company to operate the performance better in the core business, which international expansion can make the company revenues come
In the past decade the topic of outsourcing has become a heavily debated subject on if it is ethically correct to outsourcing jobs to foreign countries. Outsourcing has become more and more an option for many companies and not just an economic fad. The decision to outsource is a difficult one for any company to make because there are many advantages and disadvantages to consider. The decision to outsource affects many people, communities, and industries so if a corporation decides to outsource they must consider how it will affect human dignity, the common good of the economy, and subsidiary.
Customers are becoming more cost-conscious and this is resulting in changes in our supply chain process in order to reduce production costs and remain competitive in our market. Outsourcing has become a necessary measure in order to cut costs and increase competitive advantage. Outsourcing certain aspects of the supply chain, while having both advantages and disadvantages, can be very beneficial to the company. When analyzing whether outsourcing will be good for the company, one must look at the advantages and disadvantages of outsourcing, how it will decrease costs and increase competitive advantage, and what changes will take place with a newly developed global workforce.
In the current business world, cutting costs and allocating resources with the best quality is one of the most widespread and familiar concepts to many business owners. To achieve proper efficiency and effectiveness, outsourcing seems to be common among different types of businesses, not just ones with larger amounts of profit or total assets. Seeking outside help through various countries is one of the key factors that can assist with the potential reputation of a business because cheap labor and satisfactory quality push for better organizational structures. Benefits such as these have evolved into becoming the norm for companies to follow; in Chapter 6 of Contemporary Management, global outsourcing demonstrates a positive effect on businesses and ties into the notion of globalization, which can connect individuals through overseas market strategies.
There are a variety of factors that outline the significance of outsourcing and its rapid growth over the years. Firstly, there has been an “increased desire on the part of organisations to focus efforts on core activities, which are the source of competitive advantage” (Wilton, 2011). This allows the organisation to invest all efforts
Outsourcing can be defined as ‘the strategic use of outside sources to perform activities traditionally handled by internal staff and resources’. In this strategy, the organizations contract out major functions of their manufacturing products to more specialized and efficient service providers, who later become valued business partners. It looks more like a simple supplementation of resources by subcontracting, but it is actually different to outsourcing. In actual outsourcing, the organization is also involved in substantial restructuring of particular business activities including, often, the transfer of staff from a host company to a specialist, usually smaller, company with the required core competencies. The current stage in the evolution of outsourcing is all about the
Outsourcing has become so prevalent in recent years that one can say that we are living in an age of outsourcing. Outsourcing have grown globally on such a scale that many companies and organizations have uprooted their entire workforce and moved them to across nations for various reasons. The global outsourcing market has continued to grow exponentially within in the past decades which would explain why many companies flock to it. According to Chamberland (2003), the global outsourcing market was estimated at 72 billion dollars in 2002, estimated to rise to 100 billion dollars in 2005 and to increase exponentially in the coming years. With such enticing figures, many companies flock to reap from the
Many people imagine only enormous Fortune 500 companies as moving production and jobs overseas. However, in today's weakened economy, even smaller businesses are now opting for outsourcing more and more to keep costs low. Even smaller companies have to deal with complex issues that are normally thought to be dealt with by larger Fortune 500 companies. Yet, despite benefits, there are also high risks involved in outsourcing, risks that go far beyond the boundary of the single organization in questions.
Offshore IT outsourcing involves sending certain types of Information Technology work overseas to be completed by independent third parties. IT outsourcing involves sub-contracting certain information technology functions to independent, third-party companies or individuals, instead of keeping those functions in-house. Outsourcing can include anything from a company outsourcing all of its data storage needs because it does not want to buy and maintain its own data storage devices, to outsourcing a very small and easily defined service, such as disaster recovery or data storage. Most large organizations only outsource a portion of
Globalization is defined as the process of international integration arising from the interchange of world views, products, ideas and other aspects of culture. A global economy allows companies to source their product or service from around the world. This enables business by giving them more options and resources to grow their business. However, globalization comes with its own set of questions and problems. Companies that do business worldwide have to constantly deal with shipping, customs, politics, and cultural barriers. This paper will be centered on the advantages and disadvantages of offshoring and outsourcing. Furthermore, we will discuss some of the factors and trends that are affecting offshoring and outsourcing.
Outsourcing is simply obtaining a product or a service from a supplier. Outsourcing services can supplement an existing internal source, replace an existing internal source, or consist of a new product or service a company has never provided before.
Outsourcing has become increasingly commonplace in businesses today. Outsourcing is defined by “the strategic use of outside resources to perform activities traditionally handled by internal staff and resources” Outsourcing is a relatively new operations management tool that began to be used around the time of the Industrial Revolution. This arose out of major technological advances in transportation in the form of the railway and canals and in communication in the form of the telegraph which allowed organisations to expand beyond their . According to Joanne Yates ‘the spread of the telegraph and of railroads encouraged firms to serve larger regional and national markets.’ This evidenced by a rise in small engineering and architecture consultants. It wasn’t until the 1970’s that outsourcing began to become more popular. The 1970’s marked the rise of computer technologies where companies began to research into home computer systems. Also in the late 1970’s communist China opened its doors to global trade. In manufacturing, the largest cost is labour therefore offshoring manufacturing to developing nations such as China where the cost of labour is
Over the past decade as globalization has “shrunken” the world, outsourcing, as opposed to insourcing, has become more profitable for large companies.
Trends in the marketplace can help determine areas a firm can explore to be successful. Use of carefully considered outsourcing can be a critical component of corporate strategy for any multinational corporation. With outsourcing opportunities in front of them, these corporations should first work to understand the demographics and capabilities of the workforce before making any moves. Companies shouldn 't simply resort to outsourcing and assume it would automatically translate to lower costs. It is important to study labor supply and demand, in order to
It is an evident fact that outsourcing is quite prevalent practice among both public and private organizations. It has been considered as one of the prime elements of any business strategy. It is with the aid of outsourcing that organizations attempt to reduce the overall cost of sustenance and augment organizational productivity in comprehensive terms. The activity of outsourcing enables the organization to render higher level of emphasis on core activities of business. In the past thirty years, various researchers have undertaken researches to support outsourcing as a mechanism for bringing down organizational costs in a substantial manner. But the comprehensive impact of outsourcing remains to be seen. This research work will assess the relevance and significance of outsourcing in reference to the process of new product development.