...Summary: The notion that free trade is beneficial to all countries involved in free trade system can be challenged with the most recent wave of globalization. In the past, outsourcing was mainly used to save money and cut costs by moving low skilled, blue-collar manufacturing jobs into poorer, low wage countries, however, currently there has been an increase of higher wage and skilled white collar professions following suit (Hill, 2012). 6a. Who benefits from the outsourcing of skilled white-collar jobs to developing nations? Who are the losers? The people who benefit from outsourcing skilled white-collar jobs to developed nation are those whole live in the poor countries as well as the consumers of goods or services being produced in the poor countries. Outsourcing benefits the poor countries by creating and supporting jobs, which results in the country being able to attain sustainable economic growth. It also benefits consumers in developed nations, who can save money when purchasing these goods, which results in them having more money to spend on other goods and services. Having more money to spend on additional goods and services is needed when improving their living standards. The people who are the losers in this process of outsourcing of skilled white-collar jobs to developing nations are the producers in more developed nations, who have lost business to enterprises that outsource (Hill, 2012). 6b. Will developing nations like the United States suffer from the...
Words: 488 - Pages: 2
...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...
Words: 2225 - Pages: 9
...Outsourcing: A Positive Perspective Abstract Outsourcing has gained a lot of recognition in the recent years. All the companies that outsource need to first access the feasibility of transferring their Business Activities. This helps in getting hold of maximum benefits that are gained through outsourcing. The U.S. has been outsourcing for many years and has benefited from Outsourcing in terms of Cost reductions and higher consumptions. Thus, Outsourcing has been beneficial both to the Market as well as the Citizens, helping to achieve a competitive edge and higher growth rates over others. Outsourcing: A Positive Perspective Outsourcing can be termed as sharing an organization's work liability with another company through certain contracts which includes conditions as well as price. With the growth of larger organizations, they choose to outsource parts of their services such as call center, e-mail, and payroll. These jobs are handled by separate companies that specialize in each service, and are often located overseas. Outsourcing helps an Organization mainly in two ways: Cost reduction and Performance Improvement, both of which increase efficiency and effectiveness. Incase of enterprises across multiple industries, an added benefit is higher customer care in all aspects of the business. Off-shore Outsourcing- the selection (Brown, & Wilson, 2005) In order to gain the maximum benefits of outsourcing one must first do the following analysis: Work Definition: The work should...
Words: 934 - Pages: 4
...Benefits vs. Risks of Outsourcing IT Services Benefits Vs. Risks Of Outsourcing IT Services The Chron article, “Benefits vs. Risks of Outsourcing IT Services” focuses on the benefits and risks associated with outsourcing information technology (IT) and services. It also suggests that businesses carefully weigh the benefits and risks of outsourcing their IT functions. The article cites four benefits and three risks that are commonly associated with outsourcing IT services. The benefits include: 1) Saving money. This is one of the most important reasons why companies choose to outsource because it frees up capital for business operations that directly produce revenues. 2) Controlling expenses. Outsourcing functions to businesses that specialize in IT services reduces internal operating costs and allows for more competitive pricing of goods and services. 3) Focus on Core Operations. This allows managers to focus on business goals and objectives without splitting time and energies outside of their competencies. 4) IT Resources Near Those of Big Businesses. Outsourcing IT functions allows small businesses to gain more equitable cutting edge technology and services that are comparable to large businesses. Conversely, the author cites the following risks associated with outsourcing IT: 1) ‘Dubious Accessibility’. The company may experience lengthy downtime during caused by system failures, which are likely to result in loss of money and productivity. 2) Loss...
Words: 359 - Pages: 2
...Outsourcing BUS 630 Jessica Ankney Professor Havens November 19, 2012 Introduction Outsourcing is seen in many different business areas in today’s market and can range from outsourcing personnel or entire projects. When determining if outsourcing is the right decision for an organization, costs and revenues must be analyzed to make an informed and smart decision. Should this step be overlooked, the organization could make a costly mistake by outsourcing when they would have seen more benefits by keeping the job in house. There are many benefits to outsourcing and can save organizations resources and money if done correctly. Outsourcing - Personnel There are many more factors that need to be considered when analyzing outsourcing: health benefits, time off for the employee, employee pay, the job at hand (will the job be a short-term or long-term project). One of the first items an organization must determine is how long their project is anticipated to take. In the IBM article, they took over for Visteon Corp in making computers for Ford Motor Co. Visteon Corp can anticipate this to be an ongoing project as vehicles are not going anywhere, thus they had to determine which situation would be more beneficial: outsource the work to IBM or continue to make the computer systems themselves. Because Visteon is trying to diversify its business away from the auto industry, they found that outsourcing was their best option (Hechinger, 2003). In the case of IBM and Visteon, even though...
Words: 1091 - Pages: 5
...markets are in decline because of global outsourcing which has created jobs overseas, with fewer regulations for the environment and lower costs of operation. Introduction: Outsourcing can happen to almost anyone. It happened to me. I woke up like any other morning. Went to McDonalds for a cup of coffee and then headed to work. Unlike every other morning though I came to work with my department shut down with no warning and an emergency meeting to tell us that we have been outsourced and are not longer needed. Many American jobs everyday are being outsourced to other countries thus hurting the economy of America and the countries that are getting the jobs. Outsourcing is the practice by which a company hires another company to do some aspect of its work. In this presentation I am going to talk to you about three main points: What are the benefits to companies pursuing an outsourcing agenda, the drawbacks to companies pursuing an outsourcing agenda and the drawbacks to the U.S. economy of the pattern of outsourcing. I. What are the benefits to companies of pursuing an outsourcing agenda? a. According to Farrell (2002) At the top of the list, is the financial impetus. To date “cost savings are still a key outsourcing benefit,” with the reduced cost of transferring labor to external settings or even overseas, coming from the access to new markets. (Farrell, 1) b. In the IT world especially, this benefit is paired with the opportunity to utilize...
Words: 1294 - Pages: 6
...Outsourcing Running a business requires many decisions to be made, one decision is whether a company should perform work internally or outsource job duties. Outsourcing is the technique used by companies to reduce cost by transferring portions of work to third party suppliers as opposed to performing the job internally. Outsourcing can be very beneficial in reducing cost, but there are also issues that surround outsourcing in general. In order to understand the benefits of outsourcing, one needs to fully comprehend the issues involved with outsourcing, the benefits that a company may experience from outsourcing, how to truly determine whether outsourcing a specific job is necessary or beneficial, and how outsourcing is relevant in today’s workplace. First, it is important to understand what outsourcing is. According to Robert Handfield (2006), outsourcing, which became a formally indentified business strategy in 1989, can be defined as “the strategic use of outside resources to perform activities traditionally handled by internal staff and resources” (para. 5). Outsourcing, sometimes referred to as facilities management, is the strategy that involves an organization to contract out certain aspects of a business to both specialized and efficient service providers. Handfield (2006 points out that subcontracting and outsourcing, although similar in nature, are different because outsourcing “involves substantial restructuring of particular business activities including, often,...
Words: 1711 - Pages: 7
...Costs/benefit analysis: Cost/benefit analysis is a systematic approach that estimates the strengths and weakness of alternatives that satisfy the transactions, activities and functional requirements of an organisation. When the decision about whether or not a business should outsource or insource arises, cost/benefit analysis can be used to evaluate the decision. It is vital for the business to know how to conduct a cost/benefit analysis for the decision making. Cost/benefit analysis involves a series of steps or stages, these stages are sequential and include defining the problem, identifying costs and benefits, choosing a criterion, comparing alternatives, and performing sensitivity analysis. In the first step of cost/benefit analysis a business defines the problem and generates alternatives. After defining the problem the business identifies and quantifies the cost and benefits of each alternative. It is a very challenging task because assigning a monetary value to cost and benefits and perceive the effects of IT is very difficult. To avoid any problems a business should have an experienced team to conduct cost/benefit analysis. Sensitivity analysis can be done to estimate cost and benefits erroneously. It involves some changeable parameters such as costs, benefits, discount rate etc. Critical success Factors: Critical success factor (CSF) is the term for an element that is necessary for an organization or project to achieve its mission. It is a critical factor or activity...
Words: 812 - Pages: 4
...and Social Science Vol. 4 No. 8 [Special Issue – July 2013] Outsourcing: A Review of Trends, Winners & Losers and Future Directions Zafar Iqbal Lecturer Faculty of Administrative Sciences Kotli University of Azad Jammu and Kashmir MSc. University of Bedforshire, UK. Aasim Munir Dad PhD. Scholar The School of Business & Management University of Gloucestershire Cheltenham, GL50 2RH. Abstract The primary objective of this paper is to analyse the outsourcing trends in last one decade and to forecast the future on the basis of past studies. In this paper concepts and trends about outsourcing has been discussed on the basis of past studies. An extensive amount of literature review has been done to obtain the objective. This paper demonstrates the previous literature and findings. Outsourcing has become inevitable and virtually many of the multinationals are outsourcing to utilise scarce in-house resources. In this research it is being observed that owners of the companies are the prime winners in outsourcing and off shoring situation. Further, a detailed review of literature indicates that along with many other motives cost factor cause major influence in outsourcing decisions. There is an ultimate outcry over the jobs going overseas from industrialized nations such as United States, the UK and the western World. However, the net economic gains for these countries are growing, and outsourcing to an offshore destination will be on the rise for the foreseeable...
Words: 11277 - Pages: 46
...Outsourcing IT Functions Lionil Alvaerez CIS Strategic Planning / CMGT-578 May 13, 2010 Professor: Robert Whaler University Of Phoenix Abstract Outsourcing is defined as the process of obtaining professional services from third party companies that will perform the same duties as in-house employees (Thompson, 2010). But outsourcing goes beyond just obtaining professional services, it is in fact the strategic use of outside resources (Faulhaber, 2005).There are many reasons an organization can take into account to consider outsourcing their IT functions. They can range from cost cutting measures, and improving IT services, to have the opportunity to tap into professionals with a higher level of expertise, that among other things can provide the rapid deployment of IT projects, or to have the IT team concentrate on projects that can provide the organization with a higher and faster Return On Investments or ROI. As there are many good reasons for outsourcing, there are also drawbacks that in the end could have a detrimental effect on the organization. Therefore, there are many issues to consider. This paper will discuss various aspects of outsourcing IT function such as, what are some of the determining factors that may lead an organization to outsource or not their IT functions, risks and benefits associated with outsourcing, where do the costs originate in an outsourcing agreement, and what are some examples of the dollar impacts which might be expected...
Words: 2594 - Pages: 11
...The lesson we can derive from this case is that outsourcing is not just a wage difference between two places but skills and attitudes. Finally, there are a large number of US companies buying professional services from Asian countries. Clearly, skilled workers will be found and hired wherever they are. Countries, such as, India, Pakistan and China are good labor pools (Prahalad 2005.) It follows that multinational and global companies will find skilled labor overseas and start operations or buy services in foreign lands. Qua hay The influence of outsourcing should be recognized. Whirlpool, for instance, has a global network, supplies washing machines from Germany, and microwave ovens designed in Sweden that are and made in China while other appliances come from Brazil. Global companies develop first-rate centers of production and design in various countries. Countries that are abundant in human capital with a supplier base have a chance to become first-rate centers. Within this framework, designed to promote a global network, financing depends on corporate profits and funds owned by prospective partners. Du Pont, for instance, raises funds through joint ventures but retains corporate control by retaining at least 51% of the share. The importance of outsourcing and globalization is that some market imperfections are removed. When imperfections are removed, prices converge. This means that factor price differentials in...
Words: 2265 - Pages: 10
...outsource their manufacturing needs. Great motivation towards outsourcing is directly linked to the cost advantages that such a factor will provide. The cost advantages, as well as quality measures of continued in-house production or outsourcing is determined by the best interest of the company. This paper examines causes and after effects of outsourcing manufacturing activities. Firms that have made a reputation of producing products in-house often consider cost reducing manufacturing firms in terms of outsourcing projects. Often when companies choose to move forward in outsourcing a manufacturing need, they too have to consider how this will affect the quantity and wellbeing of its employees. Closing a plant and/or deciding whether to offer any severance packages or job placement aid for the soon to be displaced employees need be of high priority. Background Why Companies are Outsourcing their Production Needs Outsourcing has become an increasing trend amongst many manufacturing companies searching for advantages over their competition. Steadily looking for ways to offer the lowest possible prices to the price demands of their customers, is the motivation behind the search. The American company population found outsourcing was a viable option twenty years ago and to this date it still reigns. Outsourcing however to other countries has since had a bandwagon effect, where not every company model requires to outsourcing but simply because their competitors are doing so. Companies...
Words: 1982 - Pages: 8
...Abstract The report is an analysis of the various benefits of outsourcing against the disadvantages associated with it. It highlights the benefits and clears the misconceptions that are associated with it. Outsourcing According to C.W. Axelrod, Outsourcing is, “the provision of certain goods or services by third party specialists in direct/ indirect exchange for money” (Axelrod 2004, pg 1). It means hiring specialist organizations which may be located overseas to carry out some of the activities of the business in return for money. The outsourcing industry started in the 1980’s in India when few airlines began their back-office operations; and since then, there’s been no looking back. Today this industry is synonymous with ‘sunshine industry’ or ‘youth oriented industry’. Its constantly increasing importance can be gauged from the fact that the government is planning a separate ministry to look into the affairs of this sector. Outsourcing: The Need of today The government’s decision to have a separate ministry for this industry, itself speaks volume about the vitality of this sector. This industry has truly proved to be a beacon of hope for professionals who are unable to find a full time job and at the same time it has also helped the young graduates gain experience and business skills before embarking on a full- fledged career. A major reason supporting outsourcing is the significant savings of costs, specifically on labor which on usual basis represent 60-100 percent...
Words: 881 - Pages: 4
...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...
Words: 2059 - Pages: 9
...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...
Words: 4950 - Pages: 20
