...Effects of Outsourcing Name Institution Effects of Outsourcing Abstract Outsourcing is the practice of assigning a firm's business progressions to an outside agency for the purpose of improving service quality, driving innovation, or developing benefits of lower labour costs (Burkholder. 2006). Intercontinental outsourcing occasionally known as offshoring is a significant facet of economic globalization. Since outsourcing hints to more specialization, it is anticipated to reduce production expenses and to raise productivity. This study uses micro data on American firms to investigate the effects of international and domestic outsourcing on the economy at large, jobs, the production quality and the its ethnic view in the United States. It is based on a unique survey on outsourcing covering the period 2001 to 2013 over a decade of study. The survey allows one to distinguish between domestic and international outsourcing and between outsourcing of core and support activities. This article will highlight the changes that have been observed since the initiation of the outsourcing practise to its impact on the areas of study in sub-topics. Introduction The conflict has been going on from at least the 1880s, when the first New England textile mills initiated moving its manufacturing process to the Carolinas. Whatever name it goes by be it runaway plants, outsourcing, global sourcing, offshoring workers and the public tends to have mixed fillings towards it, executives view it as...
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...Abstract Global Communications (GC) was facing a major decline in revenue, profits and stock values and had to make serious upgrades in its business practices. GC had to determine a cost-effective way to ensure their company would survive. The solutions involved outsourcing jobs, laying off workers and offering new services as well as teaming up with a satellite provider. Although stakeholders realized without these changes, GC would not survive, it is found to be difficult for some long-term stakeholders. GC’s approach appeared to have personal and ethical conflicts as they failed to communicate with employees. GC has identified the problem, strategized with its stakeholders, implemented a plan and has set the process for reevaluation and changes, if necessary. GC has found other companies, in and outside its industry, to benchmark and has taken the best practices for issues similar to theirs and have used them to increase revenue, and forego any immediate outsourcing of call center jobs. However, GC has a communication problem, in that the union was never consulted or included in the decision to outsource positions. Whey they learn of the idea, the union is very upset as they worked very hard to have employees agree to a decrease in benefits previously. The union is outraged and states they will fight the newly devised plan for its members. Implementation of these changes would allow GC to lead the communications industry globally, while providing their small...
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...Jesse Johnson Chapter 2 outsourcing Outsourcing | Advantages | Disadvantages | Low cost is the primary reason most companies outsource overseas. The time difference can also be a plus: You can send your changes to your team at the end of your business day, and have the code ready when you wake up the next morning. | The old adage “you get what you pay for” often holds true. Managing people thousands of miles away is difficult at best, so when calculating costs, consider that you may need to pay someone to oversee your overseas contractors. Language or cultural barriers can add to the complexity, and different time zones can cause as many problems as they solve. | Sending jobs to other countries stimulates trade and actually creates a stronger economy in the U.S., and in the long run, more jobs. According to this theory, once lower-skilled jobs leave the U.S., the higher valued jobs are left for the Americans to snap up. However, this is tough to swallow for employees in the U.S. who are facing the possible loss of jobs and a tougher job market. | The loss of jobs here in the U.S. even in the midst of a strengthening economy. Although the global outlook supports outsourcing in both IT and manufacturing, Americans are trying to resist the push to send jobs overseas | Today, some of the world’s largest companies and biggest employers are the product of this outsourcing trend: Sodexo in food service; IBM in information technology; Wackenhut, now known as G4S, in...
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...Outsourcing: The Government, the People and the Companies Jeffrey W. Coleman Webster University Abstract Making a decision about whether or not to move these activities offshore is a decision of far-reaching consequences. Developing countries have been unable to radically alter their industrial structure due to numerous internal institutional and external technological barriers. Consequently, they have sought global participation through outsourcing activities. This is indeed a break from the traditional self-reliant way of doing business. Outsourcing arrangements are technologically and organizationally complex, and present a variety of challenges to manage effectively. Outsourcing benefits include cost savings, quality improvement, and the ability of the organization to concentrate time and resources on its core business. Outsourcing trends change from year to year, and usually involve changes such as progressive outsourcing, cloud sourcing, mergers between organizations from different parts of the world and protectionism. In this paper we will look at a few of these areas such as the how in recent years the business practice of outsourcing jobs has been considered both a blessing for American business and a concern for the American worker, the amount of outsourcing being done and why, the affect on the economy in the United States, and the role government plays in outsourcing. The paper concludes, however, that the trend is just beginning and how our country...
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...Marcus Gardner International Economics Group Written Assignment 1 Global Trends: Manufacturing and Outsourcing Over the past decades various businesses across the globe have made shifts in the way manufacturing is handled in their companies. Some have outsourced the full scope of their manufacturing. While others have done partial outsourcing, where partial assembly is returned to the US industry. When manufacturing is outsourced, whether for goods or services, many companies downsize their work force. This creates a loss of jobs for the American industries while increasing jobs in places such as China, India and Indonesia, just to mention a few. Outsourcing, undoubtedly has its comparative advantages as far as having lower wages but it also has risks such as rising costs and trade barriers. It is some of these challenges that is believed to have created a slow re-routing of manufacturing to return to the US Industry. The global trend in manufacturing and outsourcing is that many countries rely heavily on China and other developing nations for manufacturing. For this reason many countries outsource their manufacturing to China. In the article, “The end of cheap China,” the writer reminds us that, “China is the world’s largest manufacturing power and they account for a fifth of global manufacturing.” The primary reason for this trend is due to the cheap labor. It should be noted that global manufacturing is also advantageous to China and other developing nations...
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...We should to first know outsourcing Definition: 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 (encyclopedia, 2012) in business. Outsourcing is a practice which involves transferring parts of a company’s business processes to outside suppliers rather than completing it internally (Investopedia, 2013). It is the process of subcontracting a process, such as product design or manufacturing to a third party company (Venture Outsourcing, 2013). Outsourcing could be sub-divided into two which is off-shoring and home-shoring (home sourcing). Off shoring is moving business processes overseas in order to leverage opportunities such as cheap labour expenses, entrance into new markets, skilled labour and availability of resources (Sourcing Mag, 2003). Home shoring (home sourcing) on the other hand, is “the transfer of business processes to companies within the same country” (Brunelli, 2013). The form of outsourcing to be analysed in this report is off shoring because it is one of the effects of Globalization. Outsourcing became popular in the United states as at 1980s when critics began to raise eyebrows about it as they felt multi-national corporations (MNCs) where exporting a large portion of American jobs to other countries (handfield, 2006). Some MNCs that were popularly known and criticized for outsourcing were Boeing, AT&T, Coca-Cola...
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...report is written in efforts to evaluate ethics of outsourcing and the dilemmas involved. | Ethics of Outsourcing Outsourcing has been the target of many positive as well as negative topics amongst many Americans. The United States economy has taken many hits and efforts to reduce costs have resulted in increased outsourcing in labor as well as service industries. The ongoing debate of whether outsourcing is unethical does not fall only in the act of outsourcing itself but also in the terms to which outsourced employees are treated. The question of whether mass layoffs are justifiable or ethical toward employees who are dedicated to corporations for so many years and whether resorting to illegal labor is ethical are also derivatives of outsourcing. We continue to ask ourselves if this form of cost reduction and its effects on the U.S. employees morally ethical? In these challenging economic times, there has been a large array of speculations towards the subject of outsourcing jobs to other offshore destinations. Outsourcing has been going on around the world for a large amount of time before now. Though it seems to be more of a negative topic of discussion during the fall of the American economy, it is important to realize the positive global impacts it has created. It is still considered a morally challenging topic, but there are both advantages and benefits that are being reaped around the world from outsourcing. Outsourcing has been a leading marketing tool for allowing...
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...competitors --> but we have now China, which is the "plant of the entire world" --> recent interview of new CEO of Apple: he was asked why he was producing in China (main supplier is Foxcon) and don't come back to US! But it is impossible: even if we decided to go for it, it would be impossible, since the supply chain for electronic products is in China --> no suppliers, no technology! Now also India is getting a larger and larger part of the manufacturing activity . It seems to be a good solution that we do not deal anymore with production and we are a more virtual company, which controls custumer relationship, marketing, innovation and product design - enough to be competitive, but all the rest can be outsourced --> same model of IBM, which at the beginning was a manufacturing company (40 years ago), but now they are manufactured in China --> Lenovo, Thinkpad brand. Now they are more a consulting and service company - "virtual company". Video: Interview with a consultant --> mutual outsourcing: analyze the idea of outsourcing and if it is true that a company can forget about production. Idea of Foxcom outsourcing the innovation process to Apple to build the Ipad --> reversal of our usual view. It is not Apple the owner of the process, but Foxcom, who can physicaly contruct the product --> in California, US, best innovation. Idea of mutual outsourcing that enables us to see it in a different way. There is not the possibility to consider production something...
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...companies are outsourcing the manufacturing and customer service to the low cost countries like India, China, Philippines and other emerging companies. This way the every company is spread out in different country for various purposes working together in the aim to reach their goals. While with the recent hike in fuel prices and shipping rates the firms are in fear expansion of manufacturing jobs which is affecting their cost advantage. Though, the non-manufacturing jobs such as customer service, manufacture analysis, technical work, computer programming, are not causing any disturbance for the firms cost budget. The availability of global human capital for a firm brings out numerous challenges for the managers as they would move to various countries on terms of work and should be feasible to adopt the new culture and policies of the same firm. Globalization of human capital also focuses on the mobility of the talent beyond a specific company. Example: People aim to work in reputed companies like Google, Microsoft etc. Globalization is helping in picking the right talent from various countries and giving the opportunities. Yes, globalization is inevitable as companies always aim in expanding their business with various intentions. This leads to constant work trips made by the qualified employees to different countries. How does this case illustrate the threats and opportunities facing global companies in developing their strategies? The threat facing Apple in the case...
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...that electronically track sales and quickly replenish inventory on store shelves. a. Outsourcing b. Insourcing c. Informing d. Supply chaining 2. This flattener, by enabling people to mine tons of electronic data, has greatly facilitated cross border collaboration. a. Outsourcing b. Insourcing c. Informing d. Supply chaining 3. Friedman argues that 8/9/95 is a significant date in the history of globalization. Why? a. Netscape went public, ushering in the Internet boom, which led to massive investment in fiber optics and other high tech infrastructure b. Bill Gates and Microsoft introduced Windows 95, which revolutionized the way in which companies manage information c. NAFTA was ratified by the governments of the U.S., Mexico and Canada, forming the world's largest free trade area d. Bill Clinton signed a free trade accord with China, the last major bastion of Communism in the world 4. Friedman mentions many companies that are using information technology to better serve their customers and enhance their position in the marketplace. Which of the following is a company he does NOT discuss? a. Southwest Airlines b. McDonald's c. Jet Blue d. Apple Computer 5. The owner of an American manufacturing company closes his factory in Canton, Ohio and opens a new one in Canton, China. According to Friedman, this is an example of: a. Outsourcing b. Offshoring c. Insourcing d. Open-Sourcing 6. Friedman argues that 11/9 is...
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...Mapping the outsourcing landscape Jakki J. Mohr, Sanjit Sengupta and Stanley F. Slater Jakki J. Mohr is the Jeff and Martha Hamilton Distinguished Faculty Fellow, Regents Professor of Marketing, at the School of Business Administration, University of Montana, Missoula, Montana, USA. Sanjit Sengupta is Professor of Marketing at the College of Business, San Francisco State University, San Francisco, California, USA. Stanley F. Slater, is the Charles and Gwen Lillis Professor of Business Administration in the Department of Marketing, College of Business, Colorado State University, Fort Collins, Colorado, USA. The authors thank Professor Ron Premuroso for his helpful contributions to this manuscript. PAGE 42 j utsourcing is an arrangement in which one company (the client) hires another company (the service provider) to perform a particular function on its behalf. It involves the transfer of the management and/or day-to-day execution of an entire business function to an external service provider. Based on a contractual agreement that defines the transferred services and fees, the client agrees to procure the services from the supplier for the term of the contract. Outsourcing has become more global and extensive in its scope, involving more business functions and complex contractual arrangements (Tadelis, 2007). As customer needs have evolved, so have service providers’ desire to ‘‘move up the value chain’’ and claim a larger share of...
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...Progress Report 1 * Which stocks did you invest in during this period? 1. Apple 2. Intel 3. Microsoft 4. International Business Machines 5. General Motors 6. Go Pro 7. AT&T INC. 8. Skyworks solutions 9. Cognizant Technology Solutions 10. CVS Caremark Corporation 11. Merck 12. Home Depot 13. Whirlpool Corporation 14. Vertex Pharmaceuticals Incorporated 15. Tata Motors 16. TreeHouse Foods 17. Amira Nature Foods 18. SAP AG 19. Infosys Sponsored American Deposit Receipt 20. Qualcomm Incorporated. * What are the weights you allocated to each stock and why? In my stategy, I said that I am going to divide my total money into 4 part, 125,000 each. One for technology stock, one for consumer stocks, one using the value investing strategy and lastly, one for investing in bond. Since the beginning of the trading period I haven’t invested in any Bonds yet because I’m still trying to figure out which one to invest in. So far my weights for ever sector is as follows: Technology stocks (0.5937), Consumer Stocks (0.0217), Value Investing strategy (0.5096). I also calculated the individual weights for every stock against the total. The weights are as follows: Apple – 0.001920. I only bought 10 shares of AAPL because, even though the stock has been doing really good in the market, I’m still quite hesitant about it and I feel like it’s a risky stock...
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...Laura Mosier SCM-Professor York Case study #1 “Scott’s Miracle-Gro” Scotts Miracle-Gro, the largest company in the North American lawn and garden industry, has reached a point in its existence to make a significant management decision. The company is considering whether to continue with insourcing its spreader products or switch to outsourcing in China. The solution lies in an analysis of quantitative and qualitative data comparisons and deciding which ideology would benefit the company in the long haul. When considering the costs it seems as though outsourcing would save a lot of money for the firm, however, we must think strategically. Thinking strategically means the long run, and using the statistics we were given we can estimate that the costs of outsourcing are growing quicker exponentially. Yes, the labor in China is cheaper but over a span of ten years wages are estimated to increase by 40 percent in China whereas in Temecula there is an estimated 3 percent annual increase, or approximately 30 percent over the next decade. The additional $8,000,000 freight charge when choosing to outsource would be the biggest expense. Over a span of ten years this is estimated to increase by 30%, almost 10.5 million dollars by 2017. The only area we would be saving on is the electricity costs (other than the obvious difference in the annual lease costs), but compared to the freight charges it is very little. The electricity costs in Temecula are due to increase only 25% (compared...
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...historical development of outsourcing: the latest fad? Chris Lonsdale University of Birmingham, Birmingham, UK Andrew Cox University of Birmingham, Birmingham, UK Few management practices have attracted as much attention as outsourcing is enjoying at the present time. That firms should aggressively adopt the practice is almost becoming a given, and consultants' Abstract presentations talk of a ``revolution in Notes that outsourcing is just one outsourcing''. The academic literature on the of the means by which the subject has grown in kind. boundary of the firm can be What is often lost in the hype surrounding adjusted. Considers various other means such as conglomeration the concept, however, is that outsourcing is and horizontal and vertical just one way in which the boundary of the integration. Focuses on firm can be adjusted in response to changing outsourcing and its place in this economic pressures. Indeed, any history of bigger picture and discusses the history of outsourcing. Outlines the concept should recognise this, as the concerns for managers and gives recent trends in its favour have very much case examples from Rank Zerox been set in the context of a general movement and BP. towards more ``focused'' business strategies. This article investigating the development of outsourcing is in three main sections. First, it sets outsourcing in the wider context of the boundary of the firm issue. Second, it then proceeds to discuss the history of outsourcing, and its place in...
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...The Sourcing Of Outsourcing — Presentation Transcript * 1. The Sourcing of Outsourcing Sourcing 2007: May 1 * 2. Why is outsourcing happen? Micro Drivers • You have the opportunity to reduce costs by 20% to 40% • Increasing accountability and improving services • Access to World Class capabilities • Shifting from relatively fixed to variable costs Macro Drivers • Shifting focus to strategic business objectives • Transforming your business through innovation • Being agile and ready to respond to market change: M&A , growth, divestitures, etc. 1 * 3. Global Trends Global Birth Rates Global Birth Rates ChinaPotential Player – Offshore IT services market in China will continue per 1,000 population: per 1,000 population: Eastern Europe: : China: : Potential Player – Offshore IT services market in China will continue China China 13.25 13.25 Eastern Europe to show aggressive growth over the next few years. BPO is a less mature Regional Player – to show aggressive growth over the next few years. BPO is a less mature India India 22.01 22.01 Regional Player – industry in China. English skills are being developed in government supported Large English- industry in China. English skills are being developed in government supported Philippines Philippines 24.89 24.89 Large English- programs to ensure further growth. Core competencies: low-end PC-based speaking educated programs to ensure further growth. Core competencies: low-end PC-based USA USA 14.14 14.14 speaking educated...
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