Pros and Cons of Outsourcing
International Business
14 Feb 2013
Outsourcing
Outsourcing is the contracting out of an internal business process to a third party organization. The term "outsourcing" became popular in the United States near the turn of the 21st century.(6) Outsourcing is big business today even for small businesses. Like every business decision we are faced with the advantages as well as the disadvantages of relocating part or all of a business. Outsourcing is one of the fastest growing trends in business as large-scale organizations have latched onto outsourcing due to the almost immediate savings and quality improvement. (1) Saving money by cutting operating costs, cheaper labor and lowering the cost associated with training is ultimately the biggest gain when outsourcing. In the United States the average factory worker salary is $23.32 per hour while in China the average factory worker earns a measly $1.36 per hour. There are no costs associated with health care benefits and a average factory workers in China has longer workdays. With all things considered factories in the United States average more in productivity. (3) There is a reduction in overhead due to company not being responsible for small costs that quickly add up. No or lower electricity bill, water bill, phone bill and gas bill quickly adds up. The outsourcing company is responsible for handling all fees associated with running the business.
Outsourcing enables owner to focus on core business functions without performing tedious daily duties. Entrepreneurs and small enterprises alike have benefited from outsourcing repetitive and mundane tasks, and have had more time and opportunity to grow their business. (7) Companies are able to focus on their field of expertise, which allows the company to grow. GrabCAD a engineering company described outsourcing in a simple way “Outsourcing, is like delegation, takes effort but it pays off in the end. Just like you need to delegate your tasks to be able
14 Feb 2013
Outsourcing
Outsourcing is the contracting out of an internal business process to a third party organization. The term "outsourcing" became popular in the United States near the turn of the 21st century.(6) Outsourcing is big business today even for small businesses. Like every business decision we are faced with the advantages as well as the disadvantages of relocating part or all of a business. Outsourcing is one of the fastest growing trends in business as large-scale organizations have latched onto outsourcing due to the almost immediate savings and quality improvement. (1) Saving money by cutting operating costs, cheaper labor and lowering the cost associated with training is ultimately the biggest gain when outsourcing. In the United States the average factory worker salary is $23.32 per hour while in China the average factory worker earns a measly $1.36 per hour. There are no costs associated with health care benefits and a average factory workers in China has longer workdays. With all things considered factories in the United States average more in productivity. (3) There is a reduction in overhead due to company not being responsible for small costs that quickly add up. No or lower electricity bill, water bill, phone bill and gas bill quickly adds up. The outsourcing company is responsible for handling all fees associated with running the business.
Outsourcing enables owner to focus on core business functions without performing tedious daily duties. Entrepreneurs and small enterprises alike have benefited from outsourcing repetitive and mundane tasks, and have had more time and opportunity to grow their business. (7) Companies are able to focus on their field of expertise, which allows the company to grow. GrabCAD a engineering company described outsourcing in a simple way “Outsourcing, is like delegation, takes effort but it pays off in the end. Just like you need to delegate your tasks to be able
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