...activities to focus on its core competencies; and when domestic manufacturing capacity is reached. Outsourcing is a good strategy for the following situations: Tasks that require specific manufacturing equipment and technical expertise can be outsourced to vendors who specialize in these fields to produce goods faster and of better quality. Outsourcing the supporting processes enables the firm to concentrate on its core business processes. Outsourcing also helps in risk sharing since the outsourced vendor is a specialist who can mitigate risks better. Outsourcing also helps a firm to decrease its operating risk by not completely relying on domestic suppliers; and reduces lead times in case of domestic supply shortage. Sometimes government in the foreign country provides incentives for foreign investment. Companies can sometimes access restricted market to sell their goods only if they purchase certain goods or services from the foreign country. Outsourcing helps a firm to increase its ability to operate 24 hours per day. A firm that sources from abroad may be able to exploit local competitive advantages such as cheap labor, skilled personnel, and technical experts. Outsourcing also enables firms to tap in to a knowledge base for better innovation. Outsourcing enables companies to generate better revenue recognition and provides them an added competitive differentiator. Outsourcing is not a good strategy in the following situations: The risk to expose confidential data is high...
Words: 1724 - Pages: 7
...Outsourcing in Healthcare Outsourcing in the health care industry continues to grow in an effort to cut the raising cost, to increase efficiency and quality of care by hospitals nationwide. As annual healthcare spending in United States hit $3.8 trillion (Munro, 2014), and aging population in America is increasing with the retirement of baby boomers and higher demands for patient care, the cost of healthcare will continue to grow. In response to increasing cost, many hospitals will employ outsourcing to save money and combat rising costs. This paper will examine outsourcing trends in healthcare. Prevalence and Trends Outsourcing is not a new trend in healthcare. In the past, medical centers successfully outsourced support services, such as construction, IT, translation, laundry services, housekeeping and food services. Today, in an attempt to reduce rising cost of healthcare services, hospitals increasingly turning to outside contractors for patient care and clinical services, such as medical staffing, radiology services, laboratory services and clinical specialties. The clinical specialties most frequently outsourced are anesthesia, emergency department, dialysis services, diagnostic imaging and hospitalist services (Waller, 2012). For information technology, 97% of respondents report outsourcing one or more of these services, such as EMRs, patient satisfaction surveys, help desk, CPU and peripheral maintenance and local IT support (Waller, 2012). According to Modern Healthcare...
Words: 1990 - Pages: 8
...While information technology outsourcing in general is not a new concept having been in existence in facilities management for several decades, global software outsourcing and global software development via offshore subsidiaries is a relatively more recent phenomenon becoming visible only in the early 1990s. The growth of interest in these arrangements is in part due to the pervasiveness, improved efficiency and reduction in cost of communications technologies. This is coupled with the pressure that North American and European companies are experiencing to look globally to meet their current software development manpower shortages. Companies such as Xerox and Kodak have internationally outsourced major pieces of their information systems operations and while such positive experiences are given prominence in the popular press, other not so-successful global software outsourcing experiences are often overlooked. One of the major reasons for the growth of global software development is because unlike material goods, digital information can be transported cheaply and easily. Software development tasks can be exported abroad for potentially increased access to advanced technological expertise and for reduction in costs. There are two major categories of global software outsourcing: “information systems related” and “information processing related” services. While the first category includes software development and maintenance activities, the second concerns the more routine data...
Words: 436 - Pages: 2
...Running head: Outsourcing Characteristics Outsourcing Characteristics Name CMGT 578 23 September 2013 Professor Scott Goodman Outsourcing Characteristics In this paper, the Outsourcing features will be talked about in great deal and the features will consist of what are the influential aspects in a company determining to outsource. One reason that most companies select to outsource is that they have a prospect to reduce needless expenditure. In addition, the risk engaged in outsourcing will also be reviewed, this risk is that company information is no longer confidential and the partners you selected to outsource currently to have access to all the company information. Faith and professionalism is significant in selecting to outsource to a partner. The advantages of outsourcing will also be conferred in this paper as well. I will explain in detail the method following outsourcing and the company following outsourcing. When establishing whether a company is supposed to, they contemplate many elements and one may be nothing, but the cost cutback. This also has an effect on estimate timelines, project timelines are decreased and the labor cost is cheaper. Many companies that decides to outsource their business because the pay rate is considerably lesser in the region where they would contract out their job. Another deciding element is in the assessment to subcontract the company, they do not have to employ consultant or experts...
Words: 1432 - Pages: 6
...S0263-2373(98)00040-1 0263-2373/98 $19.00 0.00 The Impact of Corporate Outsourcing on Company Value DAVID J. BRYCE, Wharton School, University of Pennsylvania MICHAEL USEEM, Wharton School, University of Pennsylvania Companies worldwide are expanding their use of outsourcing for services and products. This article appraises what is known about the impact of outsourcing on company value, and the emergent picture is not an unblemished one. Company managers frequently complain about the downsides, some companies have retrieved what they had sourced out, failures can be seen here and there, and the long-term potential consequences of outsourcing too much are yet to be seen. Still, the weight of the research evidence indicates that, when well designed and well managed, outsourcing reduces operating cost, enhances competitive strategy, and enlarges shareholder value. © 1998 Published by Elsevier Science Ltd. All rights reserved Many observers mark the beginning of the contemporary surge of company outsourcing with Eastman Kodak’s decision in 1989 to source out its entire information management to IBM, Businessland, and Digital Equipment Corp. Since this deal’s execution, now almost a decade ago, outsourcing has become a standard management device at many US firms, and corporate expenditures on it have rapidly accelerated. Symptomatic of the trend, companies signed major new contracts for information outsourcing in 1994 worth $11 billion; in 1995, $20 billion; and in 1996, $33 billion...
Words: 7260 - Pages: 30
...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...
Words: 2874 - Pages: 12
...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...
Words: 3472 - Pages: 14
...Outsourcing is an important part of Globalization. The choice to outsource U.S. jobs should be taken into great consideration as there are many segments into which it effects greatly. Also, outsourcing is a great option for a company who needs a certain project completed who do not have the man power or the money to hire a new employee, companies can outsource based on projects in the U.S.A. or abroad. Often outsourcing is a way to save money, but there can be unexpected costs as well. While it can be both a benefit to a customer it can also be a reason to avoid doing business with a company due to it. The decision to outsource is certainly not one that any organization should enter into lightly. There are many reasons to consider outsourcing to foreign countries. A few of the most significant advantages of outsourcing include the most well-known reason to consider outsourcing is to access cheaper labor. Workers in developing countries are paid far less than workers in developed countries due to the lower cost of living. Often these workers are not unionized as well, which further helps with cost cutting. At the same time outsourcing U.S. jobs to a foreign country can create a detrimental blow to the reputation of a company. In 2002 when T-Mobile was established the television spokesperson was Catherine Zeta Jones, a very classy and beautiful actress. Customer service call centers were based in the United States and there was never an issue that could not be...
Words: 1277 - Pages: 6
...What Went Wrong At Boeing? My article, The Boeing Debacle: Seven Lessons That Every CEO Must Learn, elicited spirited conversation. Several commentators noted that, in addition to the general lessons, Boeing made specific errors in the way it handled outsourcing and offshoring. Let’s take a closer look at those specifics. Boeing enthusiastically embraced outsourcing, both locally and internationally, as a way of lowering costs and accelerating development. The approach was intended to“reduce the 787′s development time from six to four years and development cost from $10 to $6 billion.” The end result was the opposite. The project is billions of dollars over budget and three years behind schedule. “We spent a lot more money,” Jim Albaugh, Chief of Commercial Airplanes at Boeing, explained in January 2011, “in trying to recover than we ever would have spent if we’d tried to keep the key technologies closer to home.” The right goal: add value for customers Let’s start with what Boeing did right. After losing market share to Airbus (owned by EADS) in the late 1990s, Boeing could have decided to focus on reducing the costs (and the selling prices) of its existing aircraft. That would have led inexorably to corporate death. Instead Boeing decided— commendably—to innovate with a new aircraft that would generate revenues by creating value for customers. First, Boeing aimed to improve their travel experience for the ultimate customers, the passengers. As compared...
Words: 2228 - Pages: 9
...Adversity of Outsourcing: Outsourcing from the Employee’s Perspective Schillen & Steinke Mitigating the Adversity of Outsourcing: Outsourcing from the Employee’s Perspective Sarah J. Schillen Seattle Pacific University USA sschillen@gmail.com Gerhard Steinke Seattle Pacific University USA gsteinke@spu.edu ABSTRACT This paper explores how outsourcing activities and decisions put the well-being of the remaining employees at risk, ultimately affecting productivity and creating further costs to the employer. It highlights four potential threats to remaining employees: trust, job satisfaction, motivation, and stress. The paper provides several suggestions for mitigating these impacts, including communication to retain trust, acting ethically to ensure satisfied employees, seeking an understanding of employee perspectives to build employee motivation, and providing good planning along with training and development to reduce employee stress. INTRODUCTION Globalization provides organizations with more options than ever before. Business leaders are continuously encouraged to adapt, reevaluate, and strategically improve processes and approaches. Best practices are reinvented rapidly in attempt to keep up with market trends. The quest to recognize new methods for increasing revenue has become the inspiration for exploring new management techniques and strategies. One such rising trend in the advent of global markets is that of outsourcing. Common purposes for outsourcing include improvements...
Words: 5411 - Pages: 22
...Firebird Electric U.S (Case Study 12) 1. Based on the data presented in this particular case I would recommend that Firebird make products based on the following rationale. First, the case suggests that outside vendors cannot match the responsiveness and service levels offered by and in-house function, largely because the outsider is not subject to the same management direction and control as employees. Secondly, there are concerns with outsourcing as it relates to confidentiality of data, strategic applications and provisions for disaster recovery. Finally, the cost savings from producing products in house can sometimes be non-transparent. Non-transparent as in many times when products are outsourced vendors try the strong hold technique which causes the prime on the contract to waste money and time. These are some of the major reasons why Firebird should consider producing in-house. 2. The benefits possibly of outsourcing is that you get vendors that have specialists that are well trained and up to date on the latest and greatest technology. Next, downsizing staff and locations can assist it overall cost savings. Also, outsourcing creates much tighter control of fringe benefits and run much leaner overhead structures. Finally, allow Firebird to concentrate on their core competencies. 3. The following steps should be considered if planning to outsource the part or product. 1. Description of Need- Firebird must first write a clearly defined set of specifications...
Words: 309 - Pages: 2
...University of Cambridge Cambridge, U.K. Abstract This paper rejects the hypothesis of Thomas Friedman that ICT-enabled globalization is driving us toward a flat world. Instead, it is argued that the world remains uneven, full of seams, culturally heterogeneous, locally specific, inequitable, not well-integrated and constantly changing. This argument is supported by an analysis of three areas of ICT-enabled global working, namely global software outsourcing, global IS roll-out, and global virtual teams. The paper then builds on these analyses to put forward an agenda for future IS research on ICTs and global working based on three research themes: identity and cross-cultural working; globalization, localization and standardization; and power, knowledge, and control. The paper concludes that the area of ICTs and global working offers the IS field a major research opportunity to make a significant contribution to our understanding of a set of crucial issues in our more globalized world. Flat world, globalization, global software outsourcing, global IS roll-out, global virtual teams, IS research agenda, identity, cross-cultural working, standardization, power, knowledge, control Keywords 1 INTRODUCTION The changes taking place in the global economy, including those in the burgeoning services component, are the subject of much debate by a wide range of commentators including journalists, practitioners, and academics. In the first of these categories, one book which has enjoyed remarkable...
Words: 6849 - Pages: 28
...University Abstract Outsourcing is the catchphrase shaking up the worldwide financial environment. Offshoring or outsourcing has changed the way many businesses and individual coexist today. Each person today, respects many aspects of offshoring/outsourcing and we have learned that more organizations are using different assets from offshoring to pick up a business advantage. With the changing worldwide economy, and the inordinate expenses connected with keeping an employees at a staffed capacity, a large number of today's organizations and partnerships are outsourcing the generation of merchandise and administrations to outside firms with an end goal to cut expenses. While numerous experts contend that this can decimate nearby economies by cutting employments at home. There are numerous disservices to offshoring which affects our American workers and families and the practice of offshoring has taken a turn in the direction of an unethical practice. For laborers in the US, various occupations are lost permently, numerous workers need to increase new abilities, due to dimished wages because of the intensity of abroad laborers. Fundamentally, American laborers are presently compelled to contend on a worldwide level, as are organizations in this global commerce. Offshoring: The Future of American Workers Offshoring and outsourcing are words that many use interchangeably. Nevertheless, there are keen variations between the two. Outsourcing and offshoring are a result...
Words: 1380 - Pages: 6
...Demographic Complementarities and Outsourcing: Implications for India By: Mukul G. Asher Professor, LKY School of Public Policy National University of Singapore e-mail: sppasher@nus.edu.sg and Research Scholar Department of Economics National University of Singapore e-mail: amarendu@nus.edu.sg Amarendu Nandy May 2006 Draft – Not to be cited without permission The authors would like to thank anonymous referees, Sanjeev Sanyal, Amlan Roy, Anantha Nageswaran and R. Swaminathan for their useful comments. The usual caveat applies. _______________ This is a longer version of the paper prepared for IMRC 2006 conference on Global Competitiveness through Outsourcing: Implications for Services & Manufacturing, Indian Institute of Management (IIM), Bangalore, July 13-15, 2006. Abstract This paper analyses the implications of differing global demographic trends for India’s competitiveness in outsourcing and offshoring. It also briefly notes the implications of differing demographic trends among the Indian states. The paper argues that demographic complementarities with high-income countries provide India with one-time opportunity to sustain its growth rate and occupy all segments of global outsourcing and offshoring activities. India has used the labor cost advantage to gain reasonable market share in these activities. It however faces serious internal and external challenges in sustaining its international competitiveness, particularly with respect to labor cost....
Words: 9196 - Pages: 37
...mixing of various cultures. The tern covers a range of aspects including economic, cultural and political trends. It also signifies the tendency of businesses and investment funds to cross national and domestic markets to other locations all over the world ending up strengthening the way various markets become interconnected, increasing international trade and enhancing cultural exchange. Globalization enables companies to draw workers from different cultural backgrounds and gain fresh insights into various cultures from the standpoint of marketing and management. The changes necessitate companies to learn the ways of dealing with the diversity and adopt new guidelines and policies. As more firms access foreign companies that provide outsourcing, employee wages tend to change significantly. The cultural, ethnic and religious diversity presents the need for increased employee training. Since more companies are operating on an international platform, employees begin working in foreign countries. With globalization it is relatively easy to manage projects from different corners of the world. Companies can also increase efficiency in their projects by comparing how other projects run in different parts of the world. Globalization has a huge impact towards increasing competition in the business world. The competition usually relates to service cost, products, price, technological adaptation, quick production and quick response among others. Presently, the market has a broad range of...
Words: 1622 - Pages: 7
