Outsourcing

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Outsourcing

Information Systems Management in Practice
Grantham University
27 March 2009

Abstract

There are many reasons that companies outsource various jobs, but the most prominent advantage seems to be the fact that it often saves money. Many of the companies that provide outsourcing services are able to do the work for considerably less money, as they don't have to provide benefits to their workers, and have fewer overhead expenses to worry about.

The single most important tactical reason for outsourcing is to reduce and control operating costs. Access to the outside provider’s lower cost structure, which may be the result of a greater economy of scale or some other advantage based on specialization, is clearly and simply one of the most compelling tactical reasons for outsourcing. Additionally, companies that try to do everything themselves may incur vastly higher research, development, marketing and deployment expenses -- expenses that have to be passed onto the customer or taken off the bottom-line. Today’s customers are too sophisticated to accept the cost representative with an organization’s attempt to maintain singular control over all its resources (Nell 2008). While cutting cost and working with out-of-date technology, poor accuracy and quality, and growing compliance and control costs are just a few of the competitive pressures companies currently face. Yet despite such challenges, many organizations remain optimistic about their abilities to compete and create new jobs. What is the source of their hope? Outsourcing. But isn’t moving skilled work outside the organization is either overseas, offshore or to another domestic company. Just a cost-cutting measure that actually threatens the creation of American jobs? Industry analysts say quite the contrary. Outsourcing has evolved beyond an exercise in cost savings into a sophisticated and proven business specialty that can also enhance quality, improve efficiency and even generate...
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