¶ … Services and Capabilities: Global Outsourcing
Global outsourcing has become a common trend in the last few decades. Organisations, especially multinationals, have increasingly taken advantage of globalisation, technological advancements, and worldwide political and economic integration to outsource business processes and manufacturing operations to off-shore entities. Indeed, outsourcing is no longer a mere temporary or short-term solution to cost minimisation -- it is now part of business and corporate strategy (Oshri, Kotlarsky & Willcocks, 2015). Today, organisations in diverse sectors and industries rely on global outsourcing to keep up with consumer demand and competition while at the same time maximising operating margins. Nonetheless, global outsourcing presents its own fair share of challenges. This paper explains the pros and cons of global outsourcing and provides examples of firms that have successfully adopted supply chain globalisation.
A major advantage of global outsourcing is cost reduction. Generally, outsourcing is motivated by the need to produce goods and services in the most cost-effective way against the backdrop of resource constraints (Barrar & Gervais, 2006). Countries like India and China provide low-cost labour, making them ideal outsourcing destinations for Western multinationals. In fact, owing to the high cost of labour in developed countries, most American and European firms have increasingly taken advantage of Asian manufacturers to remain cost-effective in the ever more competitive global marketplace. With low-cost manufacturing in Asia, Western multinationals are able to maximise their profit margins. The...
Therefore, global outsourcing provides a valuable source of competitive advantage in an environment where cost is a significant determinant of profitability.
Global outsourcing also enables a firm to take advantage of the expertise of the outsourcing provider, which the outsourcing organisation may not have (Barrar & Gervais, 2006). Outsourcing providers usually specialise in a certain field. It could be information technology (IT), research and development (R&D), marketing, or manufacturing. They build their capabilities in their field of specialisation, and can complete tasks in their field faster and with better quality. For instance, outsourcing providers in Asia have unmatched competencies in manufacturing. They can produce large quantities of products at a low cost while at the same time providing high quality. It is often more prudent for an organisation with little or no expertise in the field in question to seek assistance of an outsourcing provider. In fact, when an organisation outsources some of its processes and operations, it can focus on core activities (Barrar & Gervais, 2006). For example, if a firm outsources manufacturing to an overseas entity, it can focus its efforts and resources on critical processes such as R&D and marketing. Other benefits of global outsourcing include risk sharing and greater adaptability to change (Oshri, Kotlarsky & Willcocks, 2015).
Despite its advantages, global outsourcing presents…
Outsourcing Corporate Outsourcing: Initially an output of the 1990's outsourcing has now become a significant part of doing business by corporate America. With businesses throughout the country looking for augmenting their competitive rank in an more and more worldwide marketplace, they are observing that they have the potential to reduce costs and keep up the quality through the greater dependence on foreign service contributor seen as subsidiary to their mainline functioning. Currently,
Contracting officers today must have the skills or competencies required to become the business leaders of the future (Steele 2000)." An article found in the ABA Banking Journal asserts that Chief Information Officers are interested in it outsourcing because companies are able to acquire it skill sets that may not be present at the internal level. In this article Siemers (1995), explains that One of the reasons CIOs believe that
external components of sourcing and internal vs. external assembly. (Rao, 2001) Advantages of Outsourcing Outsourcing also referred to as competitive sourcing is considered to be a basic variation made by the private agencies to restructure the business strategies and boost the competitive advantages of the organization. Outsourcing of many human resources management functions like recruitment, training and benefits of administration is resorted to by the companies with a view to entailing
2007). While the above refers to some essential aspects of company growth, there are many other areas that could be improved. The following is a summary of some of the areas that could be enhanced and adjusted to increase viability and consumer perception of the company. Financial streamlining in the business and service area is an important aspect that has been recognized by Dell and which is in need of improvement. Customer
In addition research has found that estimate that nearly 252,000 computer programming and computer software engineering jobs could be outsourced 2015(Zarocostas). However, 1.15 million new IT jobs could be produced by 2012 (Zarocostas). In addition to the increased number of jobs that are being outsourced. Such outsourcing impacts the economy in many ways. Although many argue that outsourcing has a positive effect in the long run, for many workers outsourcing
This particular example makes it quite clear that outsourcing is incredibly useful to corporations, and its availability means that it must be utilized if a company wishes to remain competitive in the fast-paced world of technology and innovation (Intertek 2011). In this example, the workforce remains largely unharmed, as well, demonstrating the possibility that jobs really will come back around in the developed world, only shifted up the socioeconomic