...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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...MIT Sloan School of Management Working Paper 4456-04 January 2004 Global Outsourcing of Professional Services Satwik Seshasai and Amar Gupta © 2004 by Satwik Seshasai and Amar Gupta. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission, provided that full credit including © notice is given to the source. This paper also can be downloaded without charge from the Social Science Research Network Electronic Paper Collection: http://ssrn.com/abstract=486128 Global Outsourcing of Professional Services Satwik Seshasai and Amar Gupta Massachusetts Institute of Technology Email: satwik@mit.edu and agupta@mit.edu As a growing number of firms outsource more of their professional services across geographic and temporal boundaries, one is faced with a corresponding need to examine the long-term ramifications on business and society. Some persons are convinced that cost considerations should reign as the predominant decision-making factor; others argue that outsourcing means permanent job loss; and still others believe outsourcing makes US goods and services more competitive in the global marketplace. We assert that if outsourcing options need to be analyzed in detail with critical objectivity in order to derive benefits for the concerned constituencies. INTRODUCTION With a growing labor market abroad and a challenging economic situation at home, large and small firms are making the push to outsource professional...
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...of one or more types of outsourcing (IT, HR, etc) review the pros and cons of outsourcing and examine its implications for future firm strategic direction. Introduction Outsourcing has become an increasingly popular strategic tool for worldwide organizations. Due to two key phenomena such as technological advances and globalisation, most organizations have be forced to continuously produce goods and services in higher qualities and lower prices. Since the benefits of outsourcing were revealed, it has become an increasingly widespread strategic tool among organizations. A survey reports that up to 90 percent of Australian employers had out sourcing at least one activity and at least half of them had outsourced cleaning, catering, maintenance and transport (Stone, 2005:61). On the other hand, only 5 percent of outsourced organizations had reported highly satisfied with the outsourcing services ( McIvor, 2000). To gain a better understanding of whether outsourcing should be continuously pursued as a strategic tool, the following essay will be divided into four main parts. The first section will contain an outline of the motives of outsourcing. The second will be an exploration of possible advantages and disadvantages associated with the process. The last part will include implications for the strategic direction of the firm. First and foremost, it is essential to define the key terms relevant to the essay. According to Stone (2005,60), outsourcing is an organization contracting...
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...According to the article of "12 Important Pros and Cons of Free Trade", the author had said that some manufacturers and employers are encouraged to hire foreign workers for reduce labor costs and relocate factories and plants to other countries as well as some workers are forced not to join labor unions and receive lower wages due to the threat of losing their jobs (Garage). Besides workers were threat by not letting them to join the Unions, workers may also be treated like slavery; as the author, Mr. Green, had said, “Workers live in desolate places to work and paid low wages. Opponents of free trade argue that free trade has led workers from poorer countries to work long hours and forced to live in shanties without electricity even, just so they can work and send money back to their families” (Garage). In additional, women and kid may also like slavery in unusual places in the U.S. and in other countries. as according to Mr. Kimberly, the author of “Free Trade Agreements Pros and Cons: Six Advantages and Seven Disadvantages and Their Possible Solutions”, had said, “women and children are often subjected to grueling factory jobs in sub-standard conditions”...
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...Is Outsourcing Beneficial or Not? Tanya Billings BUS 644 Operations Management Dr. Gail Hoskyns-Long May 28, 2013 Abstract Outsourcing refers to utilizing outside suppliers to obtain goods as opposed to using internal suppliers. Companies that use outsourcing may benefit from low costing and increased profits. Outsourcing may be beneficial to the company by lowering costs. However, there are negatives associated with outsourcing such as the depletion of American jobs. Within the following text, some pros and cons of outsourcing will be discussed such as job loss, financial implementations, potential recognition, and profitability. Is Outsourcing Beneficial or Not? Introduction Companies are constantly striving to secure the success of their business. There are many different strategies that companies use to ensure longevity such as planning for the future with capital investing or cutting costs with outsourcing. According to Keeling (1999), outsourcing is described as obtaining goods or services from an outside supplier in place of an internal source. Outsourcing is gaining popularity as it proves to be extremely cost efficient and takes away all of the problems with internal suppliers (Oza & Hill, 2007). However, there can be negative impacts from outsourcing as well such as the depletion of American jobs and disruption of the supply chain. This paper will examine the advantages and disadvantages of outsourcing to low labor-cost countries. Outsourcing:...
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...Proctor and Gamble D. Lewis University of Phoenix BUS/ 475- Integrated Business Topic Professor Cuccinello January 13, 2009 Proctor and Gamble Why did management at Proctor and Gamble allow the management to grow prior to Lafley? Proctor and Gamble has undergone costly restructuring. Upper management has forgotten that “Strategic management is defined as the set of decisions and actions that result in the design and activation of strategies to achieve the objectives of an organization” (Pearce & Robinson, 2005, p. 1). Proctor and Gamble has lost focus of their strategic management planning which involves maintaining the company’s mission and goals and looking at the company’s internal conditions and capabilities. The company became management top heavy. Lafley described this as been too invested in their employees. When a company acquires another company, one is also acquiring the other companies’ management team. Proctor and Gamble over the past century has acquired Folgers Coffee, Norwich Eaton Pharmaceutical, Richard- Vicks, Noxell, Shulton Old Spice, Max Factor and Iams Company. In 2005, Proctor and Gamble also acquired Gillette. No wonder the present management team had to eliminate 9600 management jobs. One of the ramifications of cutting...
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...stores where they intended to buy the car seats for their baby. Hereby, where the sellers will induces the customer to purchase baby strollers as well. Bundling is the practice where the vendor will join the related products together for purpose of selling them with lower prices than the combined cost of individual products. For example, the baby item stores will combine all the baby care products such as lotion, hair & body wash, baby oil and cleansing wipes in a set and sold it will lower prices than the total combination price of every individual item. Pros & Cons of in-house and outsourcing Outsourcing Pros If you hire an outside consultant, service provider, or agency to manage a portion of your business, that is outsourcing. Benefits of outsourcing mean a business is able to save lots of money when it does not have to spend on establishing the whole setup, process, and infrastructure. By outsourcing works, a company pays only for the services that are really needed This is an efficient way to increase productivity. It organizes and streamlines the management of outsourced staff. It is easy to post...
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...Chapter 13 Off shoring, products have always been a topic of discussion among companies trying to maximize profit. This concept of doing business offshore has both pros and cons and all should be measured to determine what is best for the company both long term and short term. One benefit of off shoring application development is the cheaper labor costs. At the inception of off shoring and outsourcing, supporters of this concept have always noted that lower labor costs will benefit a company with a higher profit margin. Countries that provide off shoring services to the United Stated do not have the higher over- head costs to operate because their employee labor market is significantly lower at cost per hour than employees in the United States are. Keeping in mind the lower labor costs, many companies see that software developers can utilize the same benefits of cheaper labor as other service areas to maximize profit and minimize costs. Another benefit of off shoring application development provided by Clarety Consulting is the less production down time. In this article it is explains off shoring software development allows employees to work on site for 24 hours a day (Advantages & Disadvantages Sotware Developoment Outsourcing). The concept behind this approach to outsourcing is that with access to employees in various countries production on software never has to stop because in every country there is another time zone to begin and start the workday, thus allowing a faster...
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...Discussion: Unlike large organizations, small organizations have been less active in integrating information technologies into their business operations. For example, some of the larger airliners use online information technologies to allow passengers to make reservation, buy a ticket, reserve a seat, check in, and even print their boarding passes online before they get to the airport. * Using the airlines example mentioned above, propose several possible IT solutions and how they would benefit a smaller airline to become more successful or attract more clients. * Tell us if the availability of information technology services has influenced your decision to travel on a particular airline. What airline was it? Response: When thinking about IT concepts that might benefit smaller airlines, a few ideas come to mind. Enterprise collaborative systems, this would allow better communication with employees which would in turn, increase production. When a customer is in need of assistance and the employee is unable to provide a response, instead of trying to contact one person at a time they could broadcast the issue to several employees which would provide multiple angles of aid. Also if a manager needs to relay a message to several employees for example weather delays he could easily accomplish this using an enterprise collaborative system. MIS (management information systems) which provides data to managers to help them make decisions would also benefit smaller airlines. It...
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...be done, in terms of pros and cons. Due to limited space, most relevant and significant factors will be discussed. For the positive aspect, JRD can benefit Nokia in the following aspects: Effective Cost and Higher Efficiency: By making use of the competitive advantage for the low labor price in China and Taiwan, Nokia can achieve more effective resource allocation: with less investment to obtain higher efficiency, just as mentioned in the HBR case. Foxconn has a series of advantages Nokia can make use of to achieve higher quality and faster speed to market. Focus on Core Competencies: By outsourcing to Foxconn, Nokia will have more resource to target on core competencies. For the cons, JRD might jeopardize Nokia in the following aspects: Overlooked Costs: The reduced cost from labor wage saving is somewhat overemphasized while other tangible or intangible costs are overlooked. For instance, the training for engineers in Foxconn. The process will take time and man power, and the high turnover could make the cost much higher. Other costs include quality inspection, supplier management, custom compliance and so on. Failure to consider these costs can be hazardous, as in Boeing’s case for 787 Dreamliner. Off-shore Supplier Management: proper amount of internal resource should be allocated for off-shore supplier management. Poor communication and lack of proper governance can lead to outsourcing obstacles, which appeared in Nokia’s path in outsourcing to Foxconn. Though efforts...
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...Table of Contents System or Application Overview 3 Brief Description 3 Intended Users 3 Project Initiator 3 Requirements Specification 4 Overall Goals 4 Requirements Gathering 4 Functional Requirements 4 Describe nonfunctional requirements 4 Functions and constraints used to frame the scope 4 Application Design 5 High Level Use Case Diagram 5 Functional Decomposition Diagram 6 Class Diagram 7 Sequence Diagram 8 Story Board 8 Test and Quality Assurance Plan 9 Unit Tests 9 System Tests 9 Acceptance Tests 10 Bug Tracking 10 Development Strategy 11 Insourcing 11 Pros 11 Cons 11 Outsourcing 11 Pros 12 Cons 12 Combination 12 Pros 12 Cons 13 Financial Analysis 13 Investment 13 Savings 13 Timing 13 Strategic Fit 13 Economic Impact 13 Operational Model 13 Cultural Fit 13 Risk Management 14 Recommendation 14 Integration and Deployment Plan 15 Work Breakdown Structure 15 References 17 System or Application Overview Brief Description This document will be used to track the Requirements, Design and Implementation of a Time Card System. This system will be used to track the time 20 different employees spend working on different projects. It will also allow managers to run reports allowing them to track time by either employee or project. Intended Users This system will be used by both employees and managers. Employees will need to clock in to the current project, clock out, and change projects...
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...Introduction Before any company 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...
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...Outsourcing Jobs I think it is interesting to know the positive and negative arguments about outsourcing. On one hand, there is the current uproar about illegal immigrants swarming in to the U.S. to do the jobs that Americans don’t want to do. And on the other hand, there is the continuing outcry about jobs going overseas. This would be the outsourcing of jobs that Americans would be willing to accept if the corporations were not so adamant about improving their bottom line for their stockholders. So, what is outsourcing and offshore outsourcing? By definition, “outsourcing (or contracting out) is often defined as the delegation of non-core operations or jobs from internal production within a business to an external entity (such as a subcontractor) that specialized in that operation. Outsourcing is a business decision that is often made to lower costs or focus on competencies” (Miller, 2010). A good example of outsourcing is janitorial services. Instead of a company training several people for the position, they can outsource these tasks to another organization that specializes in recruitment services. This way they can save the time from hiring and training, and the work output should be of the highest quality. Offshore outsourcing is referred to as, “work done for a company by people in another country that is typically done at a much cheaper cost” (Miller, 2010). These services are outsourced elsewhere to countries other than where the goods and services are actually...
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...The three pros of the aforementioned statement include: 1.It encourages free trade - When a country is deprived of borders, they incur an unlimited variety of discounted consumer and industrialized goods and services. Intrinsically, fewer barriers, like tariffs, sales taxes, or subsidies are implemented since there isn’t a country to add borders ("22 Globalization Pros and Cons", 2017). For example, In Trinidad and Tobago, tariffs are now countless and theoretically possesses the preeminent market for imported consumer goods in CARICOM. It furthermore offers the local producers a final opportunity in the market. Though, it is a momentary measure, it enforces on the overseas producers to be economical, if they desire to recapture the CARICOM...
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...What are the pros and cons of outsourcing to China? By: Introduction The Objective is to explore key factors and pros and cons in outsourcing to China. Research findings identify obstacles faced by both parties in outsourcing. Economic factors are motivational factors in outsourcing to China. Cost reduction, savings, and investment reductions are the main concerns. Benefits focus on core competence, flexibility, and market penetration. Companies in China have ran across several obstacles such as poor communication and lack of preparation. Common Approaches There appears to be three commonly used approaches to outsourcing decisions (as also noted by Bolumole et al. 2007): transaction cost economics, resource based theory, and network theory. Other researchers have explained differences between these approaches(e.g. Mayer and Salomon 2006) Service Provider The vast majority of Chinese enterprises dealing with outsourcing have a single service provider. The Chinese enterprise must establish the right business requirements in order to be successful. Some of the first generations of outsourcing the senior management teams were not very happy with the results of the first few years. The management did not understand how to construct a sourcing strategy to meet the business needs. Management was unclear about the outcomes expected from outsourcing with the provider. In order to prevent unrealistic expectations they found planning to be extremely important to develop the proper...
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