...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...
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...Abstract This paper will discuss what outsourcing is about and the impact of outsourcing information technology to China. It will take a look at the benefits, challenges and risks faced when a company makes the decision to outsource their information technology functions to China. As globalization accelerates and competition intensifies, outsourcing has become a strategic solution for many corporations and governments around the world. More companies are outsourcing their goods and services to other countries. It has become a way for many companies to gain cost savings, increase productivity by outsourcing their information technology goods and services. Outsourcing of information technology services is one area that companies are taking more and more advantage of. Companies that outsource see increase productivity and quality improvement in their information technology services. China is starting to make advancements in their information technology outsourcing services, in the goal of one day being the number leader in this outsourcing area. Outsourcing Information Technology to China The world of outsourcing continues to grow with different goods and services being sent to other countries. Outsourcing of goods and services has been around for some time now. According to Patterson, Gott & King (2011), “IT and BPO offshoring are early manifestations of a larger trend that, in the long run, means that more functions can and will be located outside the countries...
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...MIS assignment What is meant by Global outsourcing? What is difference between global outsourcing and simple outsourcing? Global Outsourcing Sourcing: Sourcing is the act through which work is contracted or delegated to an external or internal entity that can be physically located anywhere. It encompasses various in sourcing or outsourcing arrangements such as offshore outsourcing, captive off shoring, near off shoring and on shoring. Outsourcing: Outsourcing is defined as contracting with the third party provider for the management and completion for the certain amount of work for certain length of time, cost and level of service. Global Outsourcing: Global outsourcing is a management strategy by which an organization delegates major, non-core functions to specialized and efficient service providers. Global outsourcing represents a significant shift in the way organizations manage and staff their business support activities. Global outsourcing is enabling business without barriers in a borderless world. As enterprises think global, their outsourcing models have changed to follow suit. Outsourcing is no longer just a short term quick-fix to achieve cost reduction. Global outsourcing uses a blend of onsite, offshore and near shore outsourcing solutions to achieve strategic business objectives for the outsourcing company. Today, there are job titles like "Chief Globalization Officer" and "Strategic Services Manager" - which just goes to show that organizations are...
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...Outsourcing and Offshoring Information Technology to India Project 420 Professor Table of Contents 1. Project Description 3 2. Project Sizing 5 3 Stakeholder Analysis 6 4. RBS 7 5. Probability-Impact Matrix 8 6. Risk Register 9 7. Summary Risk Report 11 8. Conclusion 14 9. Reference Page 15 Project Description Outsourcing to India has been a booming industry for the information technology field for over the last 10 years. India is the preferred destination for outsourcers to choose as their location of choice for outsourcing. The India IT and BPO are considered trustworthy that has an increasing role in the global customer business strategy. Because of this type of relationship, the customer service branch for outsourcing has been a new trend for customer help desk, IT systems, and a growing network for businesses. The BPO is one of the fastest growing aspects of the IT department. The purpose of outsourcing to India is to save the company money and time by outsourcing the companies call center/IT department. The priority is for the company to be able to function 24hrs a day 7 days a week. This is a high priority project to be able to ensure the expansion of the company is a success. There are several goals and benefits for American companies that are involved with outsourcing to India. One of our goals is to ensure that our team understands the high priority of this project. We have a few high tolerable risks to include the client/customer risk, financial risk, and...
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...quantitative insourcing/outsourcing analysis using the data provided. What qualitative issues might affect your final decision? Identify any costs or issues that are not part of your analysis that might affect your decision. What is your recommendation regarding what FlexCon should do with its family of pistons? Support your arguments with evidence gathered during your analysis. FlexCon is a company that prides itself on the quality of its pistons. Lately they have been relying on suppliers for major components while manufacturing simple items with relatively small differentiation. By doing this, too much of their talent is going to waste leaving them with a big decision of whether to keep outsourcing or to insource. They are already heavily dependent on suppliers for critical components. The cost it takes to insource is greater than the cost to outsource but deciding to outsource may jeopardize their quality. One critical issue that affects the decision to outsource is whether to jeopardize their quality. It was said that by cross-training employees and putting them in teams, there was a 30% increase in quality and 20% gain in productivity when making the pistons. Gaining quality and productivity are definitely reasons to continue insourcing. If they did decide to outsource it would leave room for developing new products or expanding an existing product. Stated in their 6 key trends that influence insourcing and outsourcing, “Firms are continuing...
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...Risk Analysis of IT Outsourcing Case Study on Public Companies risks can be described by using Agency theory and Transaction Cost theory [3], [4]. They identified various types of risks which are additional costs, service debasement, disputes and litigation. Without a thorough comprehension of how to manage these risks, any benefits achieved could be offset by significant losses. Therefore, risks must be measured, understood and then mitigated to ascertain that organizations will meet their IT outsourcing goals. Organizations that perform risk analysis and correctly manage risks associated with IT outsourcing will be able to anticipate and alleviate issues associated with IT outsourcing [3]. Established literatures in IT outsourcing provides strong evidence that IT-outsourcing risk management has a significant role in determining the success or failure of IT management. If risks including the relationship between undesirable outcomes and factors leading to outcomes can be understood, then they can be managed more effectively and efficiently. Consequently, organizations will be able to harvest as much benefit as it can out of IT outsourcing. Abstract—IT outsourcing is the subcontracting of previous in-house IT activities to external IT vendors who can do them better and more efficiently because they possess more resources and higher experatise. Firms are driven to acquire IT outsourcing services because they expect these specialized firms to provide...
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...CMGT 442 ENTIRE COURSE Information Systems Risk Management Week 2 Individual Assignment Service Request SR-HT-001 (Huffman Trucking Benefits Election System) Prepare a 3- to 5-page paper describing the considerations necessary to address the possible security requirements and the possible risks associated with the Benefits Elections Systems being requested by the Service Request, SR-HT-001 for Huffman Trucking Company. Week 3 Individual Assignment Security Monitoring Prepare a 3- to 5-page paper describing the security monitoring activities that should be conducted in an organization with both internal IT (payroll, human resources, inventory, general ledger, and so on) and e-commerce (Internet sales and marketing) applications. The paper will include the rationale supporting each monitoring activity you propose and any recommended course of action to be taken when a significant risk is identified. Week 4 Individual Assignment Outsourcing Risks Prepare a 3- to 5-page paper that identifies the possible risks to an organization in each of the following outsourcing situations: a) the use of an external service provider for your data storage; b) the use of an enterprise service provider for processing information systems applications such as a payroll, human resources, or sales order taking; c) the use of a vendor to support your desktop computers; and d) the use of a vendor to provide network support. The paper will include a risk mitigation strategy for each situation. One...
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...1. What are the benefits and risks associated with outsourcing? The primary benefit of outsourcing is saving money. The client can gain maximum productivity with the minimum costs. Benefits of Outsourcing: • Outsourcing is a way of risk sharing. Company minimizes risk when they outsource their business to a third party. This works in the same principle, as those diversifying investments in various plans. • Outsourcing helps in problem solving and the growth of the company. If a business outsources some of their services, the currently employed, experienced employees can focus on the critical issues or core business activities of the company. • The productivity of the company can increase when skilled employees hired at lower rates, which in turn, make it possible to hire employees in large numbers. • The quality and speed of the outsourced activities are increased. The client companies can save on taxes by hiring the right kind of outsourcing companies. Risks of Outsourcing: The major disadvantage of outsourcing is, once the agreement is signed, it is the responsibility of the supplier to look after the day-to-day business operations. It becomes difficult for a client company to take control over the business to some extent. • The chances of fraud could be the number one risk from the third party. For instant, company secrets leakage may occur, especially in IT companies. • Outsourcing could result in failure of delivering products before the deadline. It...
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...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...
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...Pros and Cons of Outsourcing Outsourcing is the practice of having certain job functions done outside a company instead of having an in-house department or employee handle them. Functions can be outsourced to either a company or an individual. In other words it is the process of assigning a company’s business processes to an external agency in lieu of enhancing service quality, driving innovation or deriving benefits of lower labor costs. Outsourcing has become a major trend in human resources over the past decade.More and more companies, large or small are turning to outsourcing as a way to grow while restraining payroll and overhead costs. The effects of outsourcing are subjective to the industry and the purpose for which the same was undertaken. However across industries outsourcing is primarily undertaken to enable companies to generate better revenue recognition and to provide them an added competitive differentiation. While done with the best of intentions, outsourcing has a telling effect on quality of products and services delivered as a consequence of this, either enhancing or lowering quality. While there could either be an increase or decrease in the turnaround time while outsourcing, it could also result in improved or decried customer service. Outsourcing, primarily undertaken to provide companies the competitive edge, can also result in easier management and better productivity based on how effectively the process in managed. Outsourcing is often undertaken...
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...Limited outsourcing strategy could be defined as, shrinking the amount of outsourcing or not allowing it to grow more than it already is. Therefore, instead of moving more divisions offshore and outsourcing for those specific dimensions of the company, they would keep those portions in house. Which is where their problem occurs, you have competition outsourcing the majority of their business, to reduce labor costs and be more cost effective. Which allows them to lower their prices on products, while keeping the quality in tact. If Microfuse does not outsource as much as possible, they will have to keep the prices consistent and relatively higher than the competition; which could hurt their sales. On the other hand, by not outsourcing for every aspect of the company almost, it helps their marketing scheme out by advertising the majority of the production and planning is done in house. Which bounces back to the strategic part, where they aren’t being as cost efficient if they aren’t outsourcing as much as possible to reduce...
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...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...
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...INFORMATION SYSTEMS RISK MANAGEMENT Week-4 assignment Wonyie V. Zarwee November 29, 2010 While it lessens the burden on organizations, reducing and shifting the cost and risk of its IT operation, security and management issues to an external service provider or vendor, outsourcing any portions of an organization's Information System has significant risks that can sometimes become detrimental to the outsourced organization. According to the Commission on Government Outsourcing, "when outsourcing an organization exposes itself to significant risks in terms of security, accuracy, and completeness of information (Holroyd City Council, 2008)". Comprised in the rest of this document is an exclusive examination of four different outsourcing activities and the associated risks that an organization needs to be aware of. Let me begin with the use of an external service provider for data storage for an organization. This situation is mostly attributed to midsized and few large business with less capital to develop and operate a databases of their own. They may neither have the finance to purchase and operate a database adequately nor the additional funding to hire a skilled IT team to manage a database in-house. In an attempt to effectively and securely manage their data at a lower and affordable budget, many of these organizations choose to outsource their data storage. Even though outsourcing of their database helps an organization to save on cost, there are many risk involve with...
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...Outsourcing Outsourcing is a strategy that concentrates an organization’s resources on its core competencies allowing the organization to achieve a definable preeminence and provide a unique value for customers (Behara, Gundersen, & Capozzoli, 1995, p. 45). The goals of outsourcing are strategic: improved efficiencies, lower costs, improved flexibility, higher quality, and a greater ability to achieve a competitive advantage. The ultimate strategic goal is to develop core competencies that develop into barriers of entry that make it difficult for competition to copy. By focusing on core competencies, and utilizing qualified vendors to provide process that are not one of the organization’s core competencies, the organization’s risk can be shared with its suppliers, and minimized. Core competencies are the collective institutional learning and capabilities of the company that allow it to supply products and services that uniquely add absolute preeminence in those competencies (Hilmer & Quinn, 1994, p. 47). “Core competencies are the innovative combinations of knowledge, special skills, proprietary technologies, information, and unique operating methods that provide the product or the service that the customer value and want to buy” (Greaver, 1999, p. 87). Activities that the organization must be proficient in are called its core activities. Core activities are those activities that are: 1. Traditionally performed internally with long standing precedence. 2. Critical...
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...Outsourcing refers to obtaining certain services or products from a third party company, essentially sourcing something like accounting services or manufacturing of a certain input to another company. While many think outsourcing refers to using a service provider in another (usually cheaper) country that is not necessarily the case. Outsourcing can be done to a company that is located anywhere, the location isnt important. The key reasons a business would choose to outsource are: Cost: Often some services or products can be obtained for a far lower price while obtaining the same level of quality. Even when the quality is not quite as good as could be done internally the cost savings are so significant that the trade-off is deemed acceptable by management. Services outsources often include internal business departments like finance or IT, where significant cost savings can be obtained. Specialization: Some business processes or products are very specialized and outsourcing to another provider provides access to higher quality. In manufacturing for example, every computer maker doesnt need to specialize in making micro-chips, they can outsource it and get a higher quality product than they could likely build themselves. Any business that has suppliers for inputs to their manufacturing process are essentially choosing to outsource part of their manufacturing process. Flexibility: For many companies outsourcing provides the benefit of only having to pay for precisely what...
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