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Outsourcing and Global Sourcing
According to Entrepreneur.com, the term "outsourcing" refers to "the practice of having certain job functions done outside a company instead of having an in-house department or employee handle them," (2011). While in the past, these job functions have been limited to menial or highly technical tasks, the consensus among outsourcing researchers is that commercial corporations are beginning to outsource large portions of corporate functions, which in turn allows them to cut costs and provide a wider, truly global range of resources for their clients and developers, hence the term "global sourcing" (Kumar & Sarangan, 2011). Nonetheless, there are those who caution against outsourcing too many functions, as the key to successful outsourcing is the effective management of outsourcing suppliers (Chung, Yam & Chan, 2004). This topic is of particular interest to me as a business student likely to work in for a corporate entity in the future. Contingent on the nature of my position in a corporation, knowledge of the benefits and risks of global sourcing could be valuable.
My research of the subject of global sourcing consisted of reading and evaluating the following five articles: "Outsourcing to an Unknown Workforce," by Par J. Agerfalk of Uppsala University, and Brian Fitzgerald of the University of Limerick (2008); "Networked enterprise: A new business model for global sourcing," by Walter W.C. Chung, Anthony W.K. Yam, and Michael F.S. Chan (2004); "The impact of corporate outsourcing on company value," by David J. Bryce and Michael Useem of the University of Pennsylvania (1998); "Antecedents and performance consequences of international outsourcing," by Michael J. Mol, Rob J.M. van Tulder, and Paul R. Beije (2005); and "Leveraging Outsourcing during Economic Uncertainty," by R. Arun Kumar and Sunder Sarangan of Infosys Technologies Limited (2011). While Agerfalk and Fitzgerald assert that global sourcing -- i.e. "opensourcing" -- is becoming a popular method of decreasing spending and enhancing competitive abilities among major corporations (Agerfalk & Fitzgeral, 2008), Chung et al. stress that effective management of outsourcing suppliers and outsourced products/services is the key to profitable outsourcing (Chung et al., 2004). Similarly, Bryce and Useem discuss the potential risks of excessive outsourcing, but still assert that properly managed outsourcing "reduces operating cost, enhances competitive strategy, and enlarges shareholder value" (Bryce and Useem, 1998). Meanwhile, Mul et al. investigate the claim that global sourcing of "intermediate products" increases corporate performance. Based on a survey of 200 manufacturing firms located in the Netherlands, Mul et al. conclude that successful outsourcing is dependent upon a firm's ability to "research and evaluate" outsourcing suppliers, as determined by the firm's "size, multi-nationality, and frequency of cross-border communications" (Mul et al., 2005). Finally, Kumar and Sarangan, authors of the article I've chosen to summarize, support the claim of previous researchers that properly managed outsourcing can reduce spending and enhance the overall performance of a corporation (Kumar & Sarangan, 2011).
Kumar and Sarangan begin by describing how inflation, the declining value of the dollar, increasing unemployment rates and widespread credit defaults have created an environment of economic uncertainty, hence the article's title, "Leveraging Outsourcing during Economic Uncertainty" (2011). Regarding outsourcing as an effective method of addressing this uncertainty, they assert the following:
A strategic outsourcing program can not only stretch the dollar in tight budgetary environments, but also create new dollars with which companies can pursue other pressing initiatives. Global sourcing efforts can help companies realign themselves with current market realities. The historical example of the 2001-02 recessions demonstrates the advantage companies can gain from thinking strategically about their approach to outsourcing. (Kumar & Sarangan, 2011)
The Global Delivery Model (GDM), they say, provided corporations with new methods of reducing costs, stretching the dollar, and improving the efficiency of corporate IT departments, while the economic downturn of 2007-08 took the GDM mainstream. In addition, global sourcing as defined by the GDM allowed corporations to become more competitive, and it greatly increased the range of resources companies can offer to their clients. Kumar and Sarangan end by citing and discussing the 4 Cs of effective outsourcing, to include the evaluation and continuous retooling of Costs, Capabilities, Competitiveness and adaptability to Change (Kumar & Sarangan, 2011).
As an example of effective global sourcing applied to the real business world, Kumar and Sarangan cite the continued…[continue]
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Conclusion It seems that global sourcing is best way to go when expanding the business even though, domestic sourcing will provide familiar suppliers. "For example, Wal-Mart identifies common products used throughout the world and "determines whether there is an opportunity to improve quality, reduce costs and, by working with a best-in-class supplier, achieve better replenishment and new item introductions (1)." For instance, Wal-Mart has worked with its copy-paper sales supplier to
Outsourcing The Impact of Outsourcing on Information Technology in the U.S. The greatest impact of outsourcing has been the decrease in the number of jobs in U.S. And this is only a continuation of the process that had begun earlier with the contracting of jobs by the large companies to small suppliers. Only now the jobs are going overseas and this is hurting the chances of certain categories of Americans from getting
Outsourcing in a Global Community "Even though 'Outsourcing' has its demerits and has been criticized the benefits which it brings is advantageous to the U.S. both now and in the long run." This statement identifies a claim of fact showing that even though outsourcing has its demerits as any other condition would entail, the benefits which the U.S. economy would achieve by way of outsourcing is much more than its disadvantages and
Outsourcing ZeusCorp is known for its effective and efficient outsourcing practices. The cost of labor is examined to elevate at a very high pace ever since the global inflation has taken roots in the contemporary market place. By comparing the currency rates and the cost of labor the fact become vivid that outsourcing from third world and other developing countries is a cost effective solution to successfully penetrate the market of
Ltd., 2007). Furthermore, by 2008, real GDP is expected to be $124.2 billion higher than it would be in an environment without it software and services offshore outsourcing (Flatworld Solutions Pvt. Ltd., 2007). Finally, over the last 10 years, the economy has created an average of 3.5 million new jobs a year, and the vast majority of displaced workers are re-employed within six months. According to Flatworld Solutions Pvt. Ltd.
0 as well as 2.0, is the loss of managerial control over the performed operations. Managers find it more difficult to control virtual teams than the employees that work in the direct sub-hierarchy. In order to regain some of the lost control, managers could delegate internal workers to the vendor and charge them with the supervision of the foreign team. However, this solution increases the costs, as the delegated managers
S. What kinds of jobs? What countries? Starting around in the initial part of 2004, writings started getting published in the mass media opposing that "insourcing" - supposedly shifting jobs from the outside the U.S. into the U.S. is bigger than "outsourcing." This might seem difficult to accept as true, however there is a basis for accepting it as true. (Globalization: the Outsourcing-Insourcing Issue) "In-sourcing" produced a considerable range of comparatively