...Outsourcing: What’s the true Impact? Cameron D. Rafford MGT 580: Intro to Organizational Behavior University of New Hampshire INTRODUCTION Outsourcing has quickly become one of the most controversial business tactics in the United States. Nowadays, if you call the customer service line of a major business or corporation, there’s a good chance you’ll end up talking to someone thousands of miles away. If you go shopping for new clothes, it’s likely that some of the shirts and pants you try on were manufactured by people from foreign countries, in shops far less glamorous than the ones the finished products end up in. Outsourcing is so commonplace in certain industries, we don’t even think twice about it anymore. But over the past few years, the trend has spread to practices far beyond call centers and apparel manufacturing. In fact, you might be surprised at the industries that rely on outsourcing now (Divine, 2010). This paper will examine the effects that outsourcing has already had on business, as well as look a little bit into the future to see what it holds for us down the road. It will focus on how it has affected our economy and society as a whole, as well as the individual organizations and their employees. There are both positive and negative impacts of this way of doing business that need to be realized and accounted for in order for the economy and American business to remain strong. We will reflect...
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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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...countries like Poland and Romania are strong spots on the global outsourcing map Globalization & Integration Group Project Table of Contents Abstract 3 Introduction 3 Poland 4 Significant savings costs 5 Ability and quality of resources 5 Low risk location 5 Culture Similarity 6 Investment Climate 6 article 7 Romania 8 Government support and business environment 9 Quality of the language and educational skills 9 Low labor costs 10 Culture 10 Intellectual property security and privacy 10 article 11 Comparison 12 Cost competiveness 12 Resources and skills 13 Economic competitiveness 13 Regulation 13 Corruption perception 14 Legal protection 14 Conclusion 14 References 14 Abstract In this paper, we discuss why are the Eastern European countries like Romania and Poland potential destination for outsourcing. Given an economic condition, Geographical advantage, business environment and quality issue explanation of each country. Both countries are economically competitive in outsourcing market in Eastern Europe, promptly emerging as a favorite destination. Introduction Outsourcing is a practice used externally in order to reduce costs by transferring...
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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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...Outsourcing 1/60 ABSTRACT: The main focus of this project is investigating and exploring the impact of outsourcing on one of the most iconic Danish companies (LEGO), which attracted our attention during the preparation of this project. We decided to focus on a single case study, because we felt that dividing our efforts by investigating more than one company, would not allow us to focus in sufficient detail on the domino effects that outsourcing can have on a singular institution. The main question of this project is “How could LEGO improve the Make-or-buy- decision and the relationship management when it comes to outsourcing”? In order to answer the main question, we must consider two sub-questions stemming from the main issue, namely: “How could LEGO improve the decision-making-process to outsource by taking more influencing factors into consideration?” and “What could LEGO have done differently in its relationship to the outsourcing vendor Flextronics”. We used the Case Study Research method to work on these questions. Doing that, we reviewed theories, which explained the phenomenon of outsourcing on a theoretical basis. After creating a theoretical framework and the database, we analyzed the case (LEGO) for parallels between the theories and their practical experience. Finally, we were able to drawn some conclusions to both the central and subsidiary questions initially posed. In summary, it can be said that LEGO did not take all aspects into...
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...historical development of outsourcing: the latest fad? Chris Lonsdale University of Birmingham, Birmingham, UK Andrew Cox University of Birmingham, Birmingham, UK Few management practices have attracted as much attention as outsourcing is enjoying at the present time. That firms should aggressively adopt the practice is almost becoming a given, and consultants' Abstract presentations talk of a ``revolution in Notes that outsourcing is just one outsourcing''. The academic literature on the of the means by which the subject has grown in kind. boundary of the firm can be What is often lost in the hype surrounding adjusted. Considers various other means such as conglomeration the concept, however, is that outsourcing is and horizontal and vertical just one way in which the boundary of the integration. Focuses on firm can be adjusted in response to changing outsourcing and its place in this economic pressures. Indeed, any history of bigger picture and discusses the history of outsourcing. Outlines the concept should recognise this, as the concerns for managers and gives recent trends in its favour have very much case examples from Rank Zerox been set in the context of a general movement and BP. towards more ``focused'' business strategies. This article investigating the development of outsourcing is in three main sections. First, it sets outsourcing in the wider context of the boundary of the firm issue. Second, it then proceeds to discuss the history of outsourcing, and its place in...
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...chosen to outsource many business functions rather than keeping them in-house. Small businesses are also seeing the benefits of outsourcing. The paper examines this growing trend and the reasoning behind those decisions to outsource. There has been speculation about future trends and changes in the business model. Advances in technology have been a driving force in these movements. A new wave of outsourcing, often referred to as “land grabs” has been increasing in popularity. A World of Outsourcing At the heart of most successful companies you’ll see a growing movement toward outsourcing. Business outsourcing can best be defined as: The contracting or subcontracting of noncore activities to free up cash, personnel, time, and facilities for activities in which a company holds competitive advantage. Outsourcing is often an integral part of downsizing or reengineering. Also called contracting out ("Outsourcing," n.d.) At one time, the United States thrived in manufacturing but little by little those jobs have been eliminated or moved overseas. This is evident by the abandoned manufacturing facilities scattered through-out the country. Manufacturing jobs are not the only functions that have been outsourced. So, why do we outsource and which key business functions have been moved off-shore? The Beginning of Outsourcing Outsourcing was officially recognized as a viable business strategy in 1989. At that time, the primary focus was on IT and telecommunications...
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...“Outsourcing-Offshore” Outsourcing is said to have emerged a few thousand years ago with the production and sales of food, tools, and other household appliances. As soon as small communities and societies began to form, people with specialized professions began to trade with each other for goods and services. It can be said that each worker was outsourcing some activities to others. Research shows that even in the industrial age, a few thousand years later, very few companies outsourced any of their operations. Companies in the 1800s and 1900s were vertically integrated organizations, taking care of their own production, mining, and manufacturing from raw materials to finished goods as well as then shipping the goods to company owned retail outlets. These companies often handled their own taxes, employed their own lawyers, as well as designed and built their own buildings without outside assistance. This model does not apply to all companies during that time period, but it gives a general idea of the time. The history of outsourcing portrays that as onshore outsourcing continued manufacturing outsourcing of low-tech items such as toys, shoes and apparel goods began to take place. After this manufacturing higher value items like high-tech components and consumer electronics began to appear. In fact outsourcing history demonstrates that manufacturing was the first activity that began to move to offshore destinations in a quest for lower costs. Globalization began during...
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...Kristen Ramer This day in age October 2012, there are many opportunities that present themselves to save companies money to be able to expand or grow. Outsourcing has become a hot topic with Americans and the majority of Americans are not thrilled with the idea. Americans that are not supportive of the idea may or may not have done their research to give them the facts to support their claims. What I am going to do is discuss the pros and cons of outsourcing and provide examples that can actually make or break companies who decide to outsource. Outsourcing is a strategic decision and the company ultimately has the final say, but the important decision may affect their reputation is that a chance they are willing to take? Airlines are extremely important in America, we are a country that travels nonstop and Airlines have become a necessity. I believe that some positions in the Aeronautical field could most definitely be outsourced, but the important question is what positions and at what cost? I think the best positions to outsource are the labor-intensive positions. For example the interior of the plane, putting fabric on the seats, assembling the seatbelts and all the other tedious work involved with setting up the airline inside the plane. I think outsourcing projects like this will ensure the customers are getting the best service and people that are able to communicate back and forth. I have been in a situation where I called for help with a technical problem...
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...represent great opportunities to improve the performance of healthcare organizations. Three articles explain the helpfulness of virtual teaming, two articles and one book explains the benefits of outsourcing, and the last three articles explain why customer relationship management, also known as CRM, is a helpful resource. This paper will define the management practice or breakthrough idea, discuss the expected impact on improved patient outcomes, higher levels of customer satisfaction, and identify the critical success factors associated with implementing these programs in a health services organization. These management practices or breakthrough ideas, in my judgment, will be ranked the greatest, second greatest, and third greatest potential benefit for healthcare organizations. Healthcare is one of the biggest organizations around. Because of its size, and the many departments within a healthcare cooperation there is much need for organization between management, staff and their patients. There are many ways to make sure that a healthcare system operates smoothly. I agree with Martin Van Buren when he stated that it is easier to do a job right, then to explain why you didn’t. In this paper there will be three ideas that may get the job done right such as, virtual teams, outsourcing, and customer relationship management. Virtual Teams Virtual teams, in my opinion, would be the 1st improvement I would make. I believe virtual teaming is important, because the way a physician...
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...Anh Tran PSU ID: 9 5424 7020 Extra Credit: Video Response `Let us all face it, the fact about outsourcing as a controversial topic. When talking about outsourcing, I begin to look from two different directions. First, we have to consider the group of people who are hurt because of outsourcing. According to investopedia.com, “outsourcing is a practice used by different companies to reduce costs by transferring portions of work to outside suppliers rather than completing it internally.” Simply put, outsourcing is the idea where the company replaces local jobs by another location cheaper in cost. As a result, the local employees are losing their jobs and are having hard to time to find another. To be specific, in the United States situation, the number of unemployed population as well as the victims of the outsourcing layoff is claiming that outsourcing is the main reason behind losing their jobs. Protestants’ anger is not only losing their jobs but also that their jobs are being transferred oversea to many less educated than they are. However, we also need to look at a bigger picture, the economy as a whole. In the past, the United States had always shown it competitive advantage, such as advance in technology, creativity, and the skilled labor. Unfortunately, as the technology continues improve, the technological competitive advantage becomes less credible. Now, technology and software, which once are developed, will quickly be adapted and copied. Unlike the US, other...
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...Timmy Throntveit Organizational Theory September 21, 2014 Research Paper: Outsourcing Outsourcing is the practice used by different companies to reduce costs by transferring portions of work to outside suppliers rather than completing it internally (Investopedia). Why do many organizations outsource their business overseas to countries like China or India? Outsourcing is an effective cost-saving technique when used properly. Outsourcing is sometimes more affordable to purchase a good from companies with comparative advantages than it is to produce their products internally. China and India are the fastest growing economies around. The most obvious reason is the reduced costs. Wages for skilled workers are lower in developing countries such as China or India. The outsourcing of American jobs has become one of the biggest topics in the United States. The country's working class faces pressures which they have not experienced since the Great Depression of the 1930s (Magdoff, Foster). Outsourcing continues to have several different opinions from many individuals. On one side of the topic, many are in support due to the low cost for companies. The main reason is outsourcing boosts the United States economy. On the opposing side, many are opposed to outsourcing because of the reduction of jobs in the United States and a variety of other factors. The focus on outsourcing has led to many companies being shipped to foreign countries like China and India. With the rise of technologies...
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...1.0 Introduction First of all, outsourcing can be regard as finding an outside or external vendor to conduct all or certain part of an organisational activity and this method is usually practiced by Transnational Corporations in their business operations due to cost constrain (Ashley E, 2008). (Please refer to appendix 1.0 for more information on Transnational Corporations). Furthermore, the main factor that forces many companies to be more low cost oriented is due to the massive pressure of the current competitive market and also the destructive price wars causes by globalisation that has been circulating in the market ever since the pre-1900s era (Henry A, 2008). (Please refer to appendix 1.0(A) for more information on History Of Outsourcing). In addition to that, by cutting cost in any way can eventually effects the specific company`s position in the market and that is why many companies also tend to choose those low wage countries in Asia for the outsourcing of their non-core business activities (Ashley E, 2008). The non-core business activity that the companies usually seek for outsourcing will be ranging from packaging and distribution, assembly and many more. Thus, through the existence of outsourcing ultimately enabled companies to focus on the prospective directions of activity, utilise the available resources efficiently, development of core competencies and to gain competitive advantage as well (Lacity MC & Willcocks LP, 2001). In accordance with that, the first...
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...Why Does Big Corporations Move to Another Country to Save Revenue? “The United States of America’s economy is in shambles.” Statements like these are heard more often than ever in today’s media. More depressing economic dialogue usually follows them, though I was not trying to include a pun alluding to the Great Depression. This dialogue usually refers to the great economic bailout organized by the government and paid for by the people, however is not every circumstance in which the government has spent money in some way or another paid for by the people via taxes? That is an argument for another time. The next most popular economic anecdote with which the media uses to boosts its ratings is concerning the major three United States based automotive corporations: Ford Motor Company, General Motors Corporation, and Chrysler. The bailout of these automotive manufacturing corporations has stirred great debate within the walls of the Capitol. The proponents of the bailout state that even if we do not go through with a bailout for these automotive manufacturing companies, the country in some way or another will ultimately being paying the same – if not an increased – amount of money to support all of the people that will lose their jobs if these corporations are to go under (Graves). The people against the bailout say that these corporations are coming to the government due to the bailout of major banks and insurance firms and wanting “a piece of the pie” for themselves. There are...
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...There is no denying that outsourcing is a major phenomenon on a massive global scale. The Information Technology field is a major contributor to global outsourcing. Outsourcing is currently a major social and political issue in the United States. At stake are thousands of jobs ranging from help desk operators to software programmers. The financial impact outsourcing has on the global economy is also a key factor. As time passed, companies recognized the need to cut operating costs, reduce personnel and save their resources. Hence, outsourcing came to the forefront as a way to stay competitive. Developing nations like India and China have come to light in recent years as they have a wealth of computer engineers and programmers who will work for low wages. Outsourcing has become such a common practice that it is now considered a benefit to the world economy, and knowing that outsourcing is a $400 billion a year industry and IT outsourcing is a vital part of the industry. A slump in IT outsourcing would mean a loss for the global economy andThe world must accept that outsourcing is a major staple to the world economy. However, with every step forward, come two steps back. Companies continue to outsource jobs overseas, leaving thousands jobless in the United States. Companies have emphasized costs cutting and profits rather than focus on the social change outsourcing has done to American Society and the economy. The era of technological outsourcing has essentially lowered the...
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