Outsourcing Case Study

Introduction

Organizations are trying to reduce their production costs in every possible way in effort to deliver optimal returns on investments to their owners. Outsourcing seems to be widely used for accomplishing this mission. The US Bureau of Labor Statistics uses the term outsourcing to describe the “movement of work that was formerly conducted in-house, by employees paid directly by a company, to a different company” (Mucha 28). Organizations worldwide also put a lot of effort to gain competitive advantage through cost-cutting strategies such as outsourcing. This paper addresses the question are US organizations becoming too dependent on outsourcing and whether organizations based in the US should focus on creating and protecting jobs at home or facilitating international business even if it means moving some productions abroad.

Trends in outsourcing

Many critics for business outsourcing say that various jobs that were initially held by the Americans go forever whether (or not) organizations employing them venture in manufacturing outsourcing deals offshore or inshore. Although any loss of jobs will imply more government expenditure in welfare and/or reduced tax revenue, outsourcing has its advantages and disadvantages to the US economy. According to Forrester Research at least 40 % of Fortune 1,000 companies are dabbling or fully engaged in sending U.S jobs overseas. Also they assert that by the end of 2015, 3.32 million jobs will be outsourced abroad. Companies outsource for many reasons but the most important reasons are:

• To reduce and control operating

• To improve company focus

• To gain access to world-class capabilities

• Free internal resources for other purposes

• Resources are not available internally

Furthe...

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...ssue of public relations rather than an issue of human rights ” (Boggan Para. 21). Measures to provide good working conditions at the Nike plants in Asian countries face challenges that come from managers and employees. This case evidences that outsourcing in Asia has a goal to cut production costs by any price and it is often accompanied by bad reputation and violated human rights.

Conclusion

In conclusion, labor costs amount to a significant portion of the total cost of a product. In a bid to reduce the cost of products that are offered for sale in the global markets, organizations seek strategies of ensuring that the prices of their products are low enough. In this quest, apart from outsourcing manufacturing services, western organizations are even outsourcing services such as customer care by transferring call centers to nations where living standards are lower