...Advantages and Disadvantages of Outsourcing Webster University PROC 5000 Abstract This paper examines how outsourcing affects a business positively and/or negatively. During this paper I will discuss the advantages and disadvantages of outsourcing. There are many reasons why a company may choose to outsource a particular function of their business. The end result in mind is saving time and/or money. Before a company considers outsourcing it should first do a competitive analysis of its company before initiating an outsourcing analysis. The company should also consider the advantages and disadvantages of outsourcing. The advantages are the following: reduction in critical resources, provides ability to focus on core business, yields cost savings, provides flexibility, reduction overhead costs, etc. The disadvantages are as follows: loss of managerial control, hidden costs, threat to security and confidentiality, quality problems, tied to financial well-being of another company and bad publicity and ill-will. When you think of outsourcing do you think of a call center in India or jobs be taken away from Americans and sent overseas? Well, since the Industrial Revolution, companies have wrestled with how they can take advantage of their competitive advantage to increase their profits. The standard for majority of the 20th century was a large integrated company that can “own, manage, and directly control”...
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...Outsourcing: The Advantages And Disadvantages Of Outsourcing Advantages of Outsourcing One of the biggest advantages can be lower personnel costs. By outsourcing job duties to non-employees, a business does not have to pay consistent wages or offer additional employee benefits. The company may pay lower taxes because independent contractors, the people who complete the outsourced projects, pay their own withholding, social security, and other taxes. This can add up to substantial savings. Some businesses choose to take their outsourcing one step further by choosing a vendor, located in another part of the world. Doing so typically saves them more money because they end up paying a much lower wage than would be necessary in their home country. The disadvantage is that these vendors may not understand English and communication is more difficult. Many times, outsourcing speeds up production time. Since the third-party vendor will only be concentrating on one specific task, instead of numerous office duties, actual production time can be greatly increased. Outsourcing gives a business the flexibility to change third-party vendors whenever necessary. This process is not as time-consuming as the normal employee hiring process, because they are not screening individuals, they are considering established companies with proven track records. An excellent example of this is customer service. When a business outsources its customer service department, it does not have to hire...
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...Advantages and Disadvantages of Outsourcing for Outsourced Employee Iman Nuraprianto GLS 470 – 12TW1 Jennifer Zoller Southern New Hampshire University December 8, 2012 Abstract Outsourcing is contracting with an outside party (vendor) to do a particular function. Basically, the function being outsourced is considered non-core to the business. This paper explores the advantages and disadvantages of outsourcing for outsourced employee. The advantages of outsourcing are more experiences, opportunity to get expertise in particular job, and manageable time & planning to the next job. In contrast, disadvantages of outsourcing are low salaries, poor employee benefits and uncertainty for continuing job. This paper describes, even though outsourcing discriminates outsourced employee, there are some benefits for outsourced employee. Advantages and Disadvantages of Outsourcing for Outsourced Employee What is the definition of outsourcing? According to Caruth, L. & Caruth, D., “Outsourcing is the process of contracting with an outside party (vendor) to perform company functions that were previously perform in-house” (2010). Outsourcing has been used by company in difference sector businesses, such as retail, manufacturing, information technology, banking & finance. Medforth argued that “outsourcing support a company to change magnitude in almost every aspects: increase in profits, productivity, business value, business performance...
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...TUI University BUS 401 Case Study Module 3 Dr. Yi Ling Abstract Outsourcing occurs when a company either buys products or services from outside sources or sends work to outside contractors versus doing it themselves. There are several advantages and disadvantages to outsourcing to include cost savings, sharing risk and developing better leaders internally. There are also some disadvantages like lack of quality control, loss of some management functions and losing the ability to build well rounded leaders in all aspects of the company. In a country like Iraq, the United States military is outsourcing many occupations in an effort to rebuild the Iraqi economy and eliminate the need for military presence at the same time As our lesson for module 3 starts out with in one of the first comments, in that people are the main asset of any organization, it is up to the organization itself, mainly through its Human Resources Department to figure out what parts of a companies process or performance could be contracted out for somebody else to perform. I am going to discuss some advantages of outsourcing to include saving money, the shared risk associated with outsourcing, accommodating fluctuations in requirements, and the assistance in developing internal staffs. I will also discuss some disadvantages to utilizing outsourcing within a business to include poor quality control, loss of managerial control, decreased loyalty among company employees, and the loss in developing...
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...Hello, as per your request I am writing this report to inform you on the advantages and disadvantages of outsourcing and whether or not you should implement this into your company. I thoroughly go through each point and explain why it is an advantage or disadvantage. As well as for advantages and disadvantages I will also explain how outsourcing can be beneficial for your company. By the end of this report I will give a recommendation on whether or not you should implement outsourcing into your company. Advantages of Outsourcing: With outsourcing implemented into your business it allows you to have more increased flexibility. Well basically with increased flexibility it allows you to “respond to shifts and shocks, new technology, unanticipated...
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...Running head: OUTSOURCING TO MEXICO OR CHINA Outsourcing to Mexico or China Kimberly Griswold Southern New Hampshire University Many companies decide to outsource to save on costs. China is one of the most popular countries to use for outsourcing. The outsourcing in China has helped China and the businesses. The lower cost of outsourcing to China has helped many companies obtain a competitive advantage. More companies are now looking to outsource in other countries. Another county that is getting a lot of attention is Mexico. There are advantages and disadvantages to both China and Mexico. There are many advantages to outsourcing in China. The first advantage is experience, China has been used my many companies for an extended amount of time so they already have standards in place. Another advantage is China has extreme inexpensive labor. The employees in China are also educated and learn fast and work very hard. “Through-put is clearly better in China than in Mexico. Attendance, punctuality, and productivity bonuses are not needed” (Amter, 2011). Many retailers are also now growing “less dependent on brand names in part because they, and their suppliers, demand and receive good value from Chinese suppliers” (Advantages of Outsourcing in China, n.d.). There are also disadvantages to outsourcing in China. China is a communist government and is very prone to piracy and counterfeiting. There...
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...Pros and Cons of Outsourcing Outsourcing is the practice of having certain job functions done outside a company instead of having an in-house department or employee handle them. Functions can be outsourced to either a company or an individual. In other words it is the process of assigning a company’s business processes to an external agency in lieu of enhancing service quality, driving innovation or deriving benefits of lower labor costs. Outsourcing has become a major trend in human resources over the past decade.More and more companies, large or small are turning to outsourcing as a way to grow while restraining payroll and overhead costs. The effects of outsourcing are subjective to the industry and the purpose for which the same was undertaken. However across industries outsourcing is primarily undertaken to enable companies to generate better revenue recognition and to provide them an added competitive differentiation. While done with the best of intentions, outsourcing has a telling effect on quality of products and services delivered as a consequence of this, either enhancing or lowering quality. While there could either be an increase or decrease in the turnaround time while outsourcing, it could also result in improved or decried customer service. Outsourcing, primarily undertaken to provide companies the competitive edge, can also result in easier management and better productivity based on how effectively the process in managed. Outsourcing is often undertaken...
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...starts outsourcing any part of a company it should be investigated and analyzed thoroughly in order to achieve maximum success. The decision to outsource a part of a company should not be taken lightly but rather seriously. There are many advantages to outsourcing, however, with that some disadvantages come in as well. The following information in regards to advantages and disadvantages was taken out of articles about IT offshore outsourcing. Advantages There are many good reasons to consider outsourcing. Some are listed below. Cheaper Labor – workers in developing countries are paid less Cut Operating Costs – the outsourced work has to be paid for, but this payment is also cheaper than having your company performed the operation itself. Lower Labor Training Costs – training new employees is expensive. Each employee might need one to three weeks of training and that is expensive. When the customer service or IT department is outsourced the training is cheaper. Increase Productivity – Your Company can have employees working on site 24 hours a day. It becomes harder to attract talented employees to work less desirable shifts, however with outsourcing your company can provide service 24 hours a day, with workers around the globe operating in the best shifts available. Focus on Core Business – the outsourcing of the IT department can leave some space for other important departments within the organization. Disadvantages As discussed above there are quite a few advantages for...
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...Outsourcing Human Resources Management Functions: Recruitment and Selection Uni*********** Research Paper for HRM**** Section 1202 ********** March 16, 2012 Outsourcing Human Resources Management Functions: Recruitment and Selection Introduction In the recent past, the competitive environment for many organizations has changed, with the organizations having to operate in globally capitalized environments, rapid industrialization, and changing technology (Abraham, 1988); and just recently a global economic downturn which has had organizations to downsize their operations. As a result, these organizations are constantly seeking new managerial methods, as both a way for the organization to be competitive and to cut operating cost; the most successful method is the outsourcing of business processes. Normally the Human Resources Management (HRM) function of recruitment has traditionally been performed in-house; advocates for outsourcing this function have increased and argue that outsourcing can reduce costs associated with recruitment and selection (Klass, 2001). Some organizations delegate crucial human resource functions to outside firms as a means of utilizing available expertise, reducing expenses, and to be able to concentrate on important business activities (Abraham and Taylor, 1996). The influence of increasing levels of globalization, technological changes, the complexity of business...
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...When it comes to outsourcing, there are often many advantages as well as disadvantages. A few key points that I researched about both sides when it comes to outsourcing: Advantages of Outsourcing Outsourcing allows management to defer the details to a specialized company. Removing the details allows management to focus on the larger issues within the organization. Typically, the specialized company that handles the outsourced work boasts technological capabilities superior to the organization. Organizations view outsourcing as a cost-effective means to expand into other countries and new markets. I believe that outsourcing was a very good thing for organizations when they first started doing it; however, many companies today have cut corners with outsourcing and have suffered because of it. Disadvantages of Outsourcing Outsourcing reduces or completely eradicates direct communication between organizations and clients. Limited communication impedes the relationship building process, which may lead to the overall dissatisfaction of the organization and client. The outsourcing organization loses complete control over all areas of the company. Project implementation timelines may suffer as a result. If the organization terminates the agreement with the outsourced entity, confidential, sensitive information becomes jeopardized (Meehan, 2012). I believe that communication is everything and with outsourcing today, the control of solid communication is something that can suffer...
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...Outsourcing Teresa McGlown BUS 630 Wendy Achilles 08/27/2012 Table of Contents Introduction 1 Forms of business aspects covered by outsourcing 1 Outsourcing with reference to Hechlinger, J. Article 2 Other articles highlighting the application of new learning with respect to outsourcing 3 Dean Meyer’s Article highlighting the advantages of outsourcing 3 Sholstica’s Article highlighting the disadvantages of outsourcing 6 Present and future application of outsourcing within workplace 6 Conclusion 7 References 8 Outsourcing Introduction In the present dynamic environment, one way the companies can gain competitive edge over their competitors is by taking full advantage of all the business aspects. One of such possible aspect of performing organizational activities in an efficient manner is through the platform of outsourcing that provides a company an opportunity to hire an outside firm having proficiency in a particular field and then getting some of the organizational tasks completed through this hired firm either at a reduced cost or an increased productivity rate. A number of factors (both related to internal and external environment) are considered that helps to decide that whether outsourcing is a right answer for a particular company. The process of outsourcing facilitates learning of a number of aspects that if properly applied within an organization can serve as a competitive element for the company, enabling them to remain a competitive force within...
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...Outsourcing – A Global Challenge MBA-700 International Economics Abstract The choice to outsource is a major strategic decision not made lightly by companies in today’s global marketplace. Though it brings probable results of cost reduction, loss of control in your product or the quality of service rendered makes this a decision that should not be taken lightly. Though a concept decades old, outsourcing is a topic that brings out fervor in individuals fighting for or against it. It’s a debate centered on moral, economical, and political aspects, with feelings that intensify during economic downturns because of the This paper will discuss theories of outsourcing, while comparing and contrasting the disadvantages and advantages (SWOT Analysis – see Appendix 1) of a concept that is growing in global business. The paper will conclude, most importantly, with discussions on three outsourcing alternatives and their potential to re-invent the status quo. Introduction The advent of globalization has proven that outsourcing is not a hypothetical situation; it is a major strategic business decision growing in popularity that our American workforce must now face in the decline of our U.S. economy. Some believe that outsourcing has become a serious issue not only for our workforce, but also in our major corporations, and the political arena. Issues such as the security of our nation have become debate topics, with critics arguing that outsourcing has weakened national security...
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...manufacturing and packing their brand of Edgeworth Toffee as efficiently or effectively as possible. -Subsidiary issues 48% Packing efficiency, when the goal is 80%. Scrap rate is 9.6%, when the goal is 1.2%. Maintenance cost is expected to rise over 12 years and it is already $18,000.00. The cost of replacing the 2 packing lines for edgeworth toffee is $140,000.00, however it is expected to achieve the BPO efficiency and scrap rate targets. The cost of replacing the 20 year old manufacturing line is $600,000.00, though it was close to the target efficiency of 80% but is showing signs of deterioration. Marketing has proposed a new marketing strategy (new packaging format) which would deliver an estimated 20% increase in sales. Outsourcing the packing lines would cost $35,000.00 up front but the actual cost of production will decrease from $95.70 per case to $68.00 2. Situational Analysis: Internal Strengths Garland Chocolates of London, UK, is a leading global food manufacturer with a wide range of products operating out of more 50 plants globally, 8 stationed in the US. Garland’s products were among the leading brands in the industry which were sold in a variety of different locations: (Grocery store chains, boutique candy shops and convenience stores). Weaknesses Garland Chocolates has few weaknesses, the most pertinent being that the manufacturing and packing lines of the Edgeworth Toffee Brand are older and depreciated, therefore not as effective not efficient...
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...MIS assignment What is meant by Global outsourcing? What is difference between global outsourcing and simple outsourcing? Global Outsourcing Sourcing: Sourcing is the act through which work is contracted or delegated to an external or internal entity that can be physically located anywhere. It encompasses various in sourcing or outsourcing arrangements such as offshore outsourcing, captive off shoring, near off shoring and on shoring. Outsourcing: Outsourcing is defined as contracting with the third party provider for the management and completion for the certain amount of work for certain length of time, cost and level of service. Global Outsourcing: Global outsourcing is a management strategy by which an organization delegates major, non-core functions to specialized and efficient service providers. Global outsourcing represents a significant shift in the way organizations manage and staff their business support activities. Global outsourcing is enabling business without barriers in a borderless world. As enterprises think global, their outsourcing models have changed to follow suit. Outsourcing is no longer just a short term quick-fix to achieve cost reduction. Global outsourcing uses a blend of onsite, offshore and near shore outsourcing solutions to achieve strategic business objectives for the outsourcing company. Today, there are job titles like "Chief Globalization Officer" and "Strategic Services Manager" - which just goes to show that organizations are...
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...Timmy Throntveit Organizational Theory September 21, 2014 Research Paper: Outsourcing Outsourcing is the practice used by different companies to reduce costs by transferring portions of work to outside suppliers rather than completing it internally (Investopedia). Why do many organizations outsource their business overseas to countries like China or India? Outsourcing is an effective cost-saving technique when used properly. Outsourcing is sometimes more affordable to purchase a good from companies with comparative advantages than it is to produce their products internally. China and India are the fastest growing economies around. The most obvious reason is the reduced costs. Wages for skilled workers are lower in developing countries such as China or India. The outsourcing of American jobs has become one of the biggest topics in the United States. The country's working class faces pressures which they have not experienced since the Great Depression of the 1930s (Magdoff, Foster). Outsourcing continues to have several different opinions from many individuals. On one side of the topic, many are in support due to the low cost for companies. The main reason is outsourcing boosts the United States economy. On the opposing side, many are opposed to outsourcing because of the reduction of jobs in the United States and a variety of other factors. The focus on outsourcing has led to many companies being shipped to foreign countries like China and India. With the rise of technologies...
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