Outsourcing relates to a firm contracting with another firm to provide products or services which could otherwise be made in-house. The contracted third party company takes control of the work and it is accountable for the success of the work assigned. Many organizations today outsource services such as electronic mail services, payroll, and customer care call center services. A firm contracts with a company that has specialized in production or provision of a given service, where in many cases the company is located overseas. Having looked at what is all about outsourcing it is important to note that; a business outsources a job that it considers not to be the core business of the company. An insurance company for instance outsources its landscaping operations to companies that are experts and specialists in that job. The service providers where jobs are outsourced are referred to as third parties (Sourcingmag.com 2011). To help an organization make outsourcing decision, it should ask the following questions; after outsourcing, will the company be free to concentrate on its core activity? Will the company’s efficiency be achieved when the organization outsources? Will outsourcing help the company gain a competitive position? Among other strategic concerns (Crown 2011). Outsourcing takes place in different firms and the most common include, outsourcing of information technology (ITO), outsourcing of business processes (BPO), which encompasses outsourcing of human resource (HRO). ITO is where a business firm outsources services of computer technology from a third party company. BPO encompasses HRO which relates to outsourcing of customer care call centers services from a third party instead of doing it on its own. Companies out... ... middle of paper ... ...bm.com/press/au/en/pressrelease/28347.wss MDF Systems, 2004. 32 Benefits of Outsourcing. Retrieved from: http://www.mdfsystems.com/artman/publish/article_19.shtml Onwards Vortex Centrum Limited and Group companies, 2011. Outsourcing: Qantas in seven year deal with IBM. Retrieved from: http://chiefofficers.net Qantas Airways Limited, 2011. Our Company. Retrieved from: http://www.qantas.com.au/travel/airlines/history/global/en QuinStreet Inc., 2011. IBM Puts Qantas' IT Business in its Pouch. Retrieved from: http://www.internetnews.com/xSP/article.php/3354841/IBM-Puts-Qantas-IT-Business-in-its-Pouch.htm Sourcingmag.com, 2011. Outsourcing - What is Outsourcing? Retrieved from: http://www.sourcingmag.com/content/what_is_outsourcing.asp UBM TechWeb, 2011. Airline Taps IBM for Flexible Pricing Deal. Retrieved from: http://www.informationweek.com/news/20900330
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Show MoreSince the concept of outsourcing was introduced it has been a subject of debate between politicians and citizens of the United States. Remarkably, it was the United States who supported outsourcing and now it is the United States that feels its economic progress is being threatened by outsourcing. One may argue that the financial situations that existed two decades earlier are not the same as they are today, thus the change of time, business priorities of economies have also changed.
In many cases outsourcing has proven to be beneficial for businesses. It can help a business’s management by allowing executives to focus on the core structure of the firm rather than every specific element. Production, manufacturing, or additional servic...
Many people think that outsourcing is jobs that were held in this country going somewhere else. That is not entirely accurate. Outsourcing is actually one company paying another to do some work for it. Outsourcing can be as simple as paying a company to paint your building. Or it can be as complex as paying a company to control your human resources department.
Outsourcing is a complicated and a multifaceted subject that involves a “business[’s] purchase of parts or labor from another company rather than maintaining a sufficient enough number of its own employees to do the same work in the country where the company is already based” ("Outsourcing"). The first practice of outsourcing was in medieval times when “nation-states called in soldiers-for-hire to help their own military forces during ongoing conflicts” ("Outsourcing"). Many think of outsourcing as a one way trade of production facilities moving outside of a companies locale but in actuality it is a two way trade that also involves companies from other areas moving their factories to local areas where conditions are beneficial for the specific business. Outsourcing has evolved but the main idea has remained the same. The recent increase in outsourcing “was initiated by Wall Street pressures on corporations . . . . for increased profits . . . in the production of goods and services marketed in the U.S."(Roberts).
Outsourcing has only very recently become an issue in the United States, and as a result it has become a very popular political issue during campaigns for presidency. Outsourcing is the idea that a company will subcontract to a third party, usually outside of the US, for various parts of its business structure. An example of this and perhaps the largest source of outsourcing is call centers for tech support, where a company will subcontract to a third party and that party will build up the call center and hire the workers for it. Many people have been affected by outsourcing since it started being used widely in the 1980s, and most would argue that outsourcing is not a good business model, that while it not only negatively affects them, it affects the whole economy. While there are some unmistakable positives to outsourcing, I would argue that as a whole, the negatives far outweigh the positives and outsourcing is bad for the United States.
Outsourcing is obtaining goods or services from a foreign supplier in place of going in the country for these things. There are many debated effects of outsourcing on the economy, and there are several pros and cons to this practice. Even though there are many pros, the overall economy of America would be better off with minimal outsourcing.
Outsourcing simply means acquiring services from an external organization instead of using internal resources (Butler, 2000). By using outsourced resources, organizations can gain a competitive advantage by utilizing contingent staff to accomplish strategic goals without incurring the fixed overhead. By focusing on the leading edge and highly specialized skill sets, outsourcing providers can often offer higher quality services, or at a lower price than the client organization. Typical reasons for outsourcing go beyond simple contingent staffing. Outsourcing providers are able to maintain economies of scale with regard to specialization (...
Global outsourcing first became popular in the apparel and textile manufacturing industries during the late 1960’s and 1970’s. Then it continued with automotive, computers, electronics, and other forms of assembly work during the 1980’s. Most recently, during the 1990’s, now and also in the future the outsourcing is focused on ‘knowledge’ work such as work in software design, technical support, telemarketing, call centers, and back office work. By the end of 2009 Information Technology outsourcing (ITO) revenues were over US $250 Billion while for Business Process Outsourcing (BPO) were more than US$ 140 billion. By 2006, over 200 firms from the Forbes 2000 companies and almost half of the Top Global 250 had offshored IT and business process activities. By 2008 India was managing 65% of the ITO and 43% of the BPO market. In general, India, China, Latin America, Philippines and Mexico have been the top locations for offshoring. The United States is a major player in the offshoring of IT and business process, however, Europe is also catching up. The growth of global sourcing sparked due to the technological advances in the telecommunications industry and the internet w...
The term outsourcing refers to the act of contracting out business activities and procedures to a third party. The act of outsourcing sometimes involves the transfer of assets from one organization to the other. The term is also used to describe the act of handling the control of public services to the private corporations. Outsourcing mainly involves both the local and foreign contracting. At times, the term is used to describe relocation of business organizations to another country which is a also known as off shoring. This term is very popular in the U.S especially in the 21st century (Davies, pg. 21). The main motivation for the activity of outsourcing is the financial saving due to the reduced international labor market rates. The opposite of outsourcing is in-sourcing which is the act of bringing the business process that are handled by the third party back to in-house or the local areas instated of contracting it to another country.
Other researchers have identified several outsourcing issues, trends and strategies that companies take in establishing and effectively managing their outsourcing activities (Sinderman 1995; Carney 1997). The trend is for outsourcing relationships to function more as partnerships. Outsourcing providers are taking increasing responsibility in realms that have traditionally remained in-house, such as corporate strategy, information management, business investment, and internal quality initiatives (Sinderman 1995; Carne...
Outsourcing is a business strategy that moves through a number of functions, processes, activities and decision responsibility from within an organization to outside providers, in order to reduce the costs of an organization. This is done through negotiating contract agreements with a vendor who takes on the responsibility for managing it. The decision to outsource is a major strategic most company, since it involves weighing the potential cost savings against the consequences of a loss in control over the products or services.
Although there has been considerable debate regarding IT outsourcing, especially among IT and networking managers, studies have shown that outsourcing has become a viable alternative to maintaining costly internal IT functions, and which can result in significant cost savings as well as performance improvements to organizational operations (Kaplan, 2002). This is considered one strategic advantage of IT outsourcing. Other strategic advantages, according to Antonucci, include (1) lower ...
Outsourcing has been utilized by companies in sundry industries for many decades as a key business strategy (Ghodeswar and Vaidyanathan, 2008). Harmancioglu (2009) argue that several successful companies depend on outsourcing to continue being responsive in coping with market changes as well as to expand their operations globally. He also stated that outsourcing was primarily perceived and employed to reduce costs, however recently it has become a prevalent and essential tool to gain competitive advantage. There are various reasons that lead companies to outsource some of their functions, these include: cost cutting, entrance to new markets, and to concentrate on main activities (Ghodeswar and Vaidyanathan, 2008). Wright (2004) mentions a number of functions that a company can outsource, these include: human resources, customer care service, and information technology functions.
Outsourcing is a technique for companies to reassign specific responsibilities to external entities. There are several motivations for outsourcing including organizational, improvement, cost, and revenue advantages (Ghodeswar & Vaidyanathan, 2008).
Outsourcing has been around for many years. In this paper I will discuss some of the history of outsourcing, the goods things about outsourcing, and the bad things about outsourcing.