ASSIGNMENT 325KM QUESTION NO.16 Global outsourcing has been claimed as one of the major drivers for the globalization of production. Discuss how global outsourcing benefits the firms and why firms choose to engage in outsourcing. Outsourcing can be defined as the way for some firms or companies to help in improving their activities by using the third people or party’s abilities, skills or technology. It is something that is called as outsource. It is legal to be used by the firms or companies who needed it but it is important also to follow the law before doing it.
Apart from the factor of money, the companies and organizations outsourcing the jobs are also in charge of the welfare and safety of the people they employ, thus providing them with a safeguard. Conclusion Outsourcing work has benefitted both ways, countries like U.S and U.K get cheaper labor compared to what they might have to pay in their own country, leading to cost cutting. Items from a simple DVD player to maintaining an aircraft has gone down. Unemployment rates slashed and people provided with a safety of their future in India and China like countries. Thus, positive aspects outweighing the negative aspects.
2. Outsourcing allows hiring of more qualified individuals to relieve the workload of employees with too many responsibilities. B. The benefits of Outsourcing also extend beyond large companies and to American consumers as well. 1.
Outsourcing gives you access to specialized skill sets of resources and processes that insourcing simply cannot match, not without significant costs. Outsourcing software development also proves to be a cost efficient solution, as you will not be investing in hiring new staff to meet your new business requirements. Both insourcing and outsourcing have their distinct advantages when it comes to how an organization should approach development. Employees understand the company needs. Your employees already understand your business and how it works.
As previously addressed, the primary reason and advantage to outsourcing is to save costs, through increasing the value of output, decreasing the cost of input, and thus increasing productivity. However, the reasons to outsource does not stop here. There are also other advantages. Global outsourcing can provide specialty product lines that are exclusive to a country or region. Companies could choose to outsource production or, in the case of retailers, suppliers of country or region specific products could be outsourced.
Some of the advantages of outsourcing strategy are: • Faster completion of work and great expertise: It’s not surprising to know that usually companies outsource their work to vendors who have rich knowledge and specialization. As the vendors spend their maximum time working on their niche project, they can manage time and complete the work swiftly than internal employees. Concentrating on core process rather than the supporting ones: Outsourcing the supporting processes gives the organization more time to strengthen their core business process • Sharing risks: Risk analysis is a vital factor in determining the result of the project. Given the expertise of the vendor, one can expect that the vendors take care of risk mitigation mechanisms and fetch desirable results. • Minimized Operational and Recruitment costs: Outsourcing avoids the requirement in hiring new professionals; hence operational and recruitment costs can be reduced to a great
Since IT is their core competency, companies usually require their technical staff to have proper industry training and certifications as well. For an IT company, offshore outsourcing increases access to a ready and skilled workforce at lower costs. This is a very important factor particularly because, in a competitive industry such as IT, steady access to a talented and skilled workforce is critical in generating innovative ideas that improve the company’s competitive advantages. So to access low-cost and well-educated talent, many IT companies are turning to offshore countries. For example, companies such as Cisco Systems, Intel, Motorola, and Microsoft have moved some R&D activities outside the US.
Question 16 16. Global outsourcing has been claimed as one of the major drives for the globalization of production. Discuss how global outsourcing benefits the firms and why firms choose to engage in outsourcing. Answer : Global outsourcing is a strategic acquisition in which business is to find the most cost effective location for the manufacture of the product, even if the location is in a foreign country. For example, if the manufacture of toys found that manufacturing and delivery at a lower cost because of lower foreign country in a foreign country because of lower wages of migrant workers, the company may close the plant using domestic and foreign manufacturers.
administrations; deals and showcasing administrations; obtainment administrations; client call focus administrations; and back and bookkeeping administrations. The choice to outsource is commonly created at senior levels of corporate administration and is normally thought about as a component of a bigger key activity. Very much organized outsourcing courses of action ought to prompt a more effective distribution of parts and obligations among the gatherings to the plan and, from a client's viewpoint, can bring a scope of advantages. The perceived advantages of outsourcing include: expanded productivity (which can decipher into an imperative upper hand), decreased danger connected with running viable IT offices, controlled expenses (by discharging
Ownership advantage can be described as some privilege and benefits that a firm has other its competitors. It takes place when a firm has better technology and knowhow (managerial) which enable it to compete on the foreign market though there is the existence of transaction costs. Location advantage is the benefit a firm have when it locates in a particular area. Location advantage can include good infrastructure, possibility of large markets in the host country, government policies, and cultural diversity. Internalisation advantages suggest that firm would engage in foreign production instead of going through licensing or franchising if the internalisation advantage gain from cross border market is bigger.