The Analysis of the Impacts of the Outsourcing: About Its Advantages and Disadvantages on Economic Development

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The analysis of the Impacts of the Outsourcing: About its Advantages and Disadvantages on Economic Development By Ni Huimin
In recent years, oursourcing has become a more and more common form for firms to subcontract their commercial activities in order to expand their productivity. For that reason, there has been much interest in this field which in turn has resulted in a wealth of literature being published around the topic, such as ‘Outsourcing : a business guide to risk management tools and techniques’; ‘Outsourcing as a way of life? Knowledge transfer in the Yangtze Delta’.

‘If you search the Business Source Premier database on the keyword ‘outsourcing’ generated a staggering 2,669previewed articles using outsourcing in their titles,keywords,or abstracts, 917 of which were published in 2004 and 2005 alone. In the non-peer-reviewed category a further 19,364 articles appeared.Furthermore the Library of Congress holds 337 books and 1 documents for which outsourcing is a keyword.’(Michael J. Mol.(2007). Design, Process, and Performance. London Business School.2:22).

Outsourcing, in books, journuals, websites and all kinds of forums has created many fresh topic around it from each aspects. If we explore why it could be a hot topic, one of the reasons is it’s a new area but also because the whole field of outsourcing is in itself so interesting.

Read throughout some of the literature about outsourcing we can find that some questions occur many times. We can conclude that people are interested and want to define and analysis some phenomenons appear in this area. The following questions showed is recurrent throughout the literatures.

•The definition of outsourcing
•Analysis it’s effects on firms: advantages and disadvantages

In this literature review, I’d like to disscus the questions above combine with other literatures combined with other literatures.

The definition of outsourcing
Outsourcing is an activity that comes up about twenty years ago, and it is becoming one of the most important sectors in the world today. And There seems to be indefinable in the management literature about what is meant. Various definitions came up by different practitioners and academics. Let’s illustrate it with some examples. Lohand Venkatraman (1992:9) believe IT outsourcing is the significant contribution by external vendors in the physical and/or human resources associated with the entire or specific components of the IT infrastructure in the user organization. Lei and Hitt (1995:836 ) think of outsourcing as simply the reliance on external sources for the manufacturing of components and other value-adding activities. From these representation above, we can conclude that the definition of outsourcing is so broard that contains any business area, which the organisation can gain any good or service from outside.

However, outsourcing is not a procurement behavior. Differently, outsourcing is less common and represents the highly strategic decision to breakthrough the internalization of an activity (K. Matthew Gilley & Abdul Rasheed, 2000). In my opinion, outsourcing is an activity that firm build relationship (using a third-party company) with other manafacturer to transfer their productivity to them which could fit firms particular needs which also means to handle with numerous duties and departments that do not really have to be executed by the chief business, in that way, the firm can also save resource and expand the scale. It also can be seemed as a strategic to promote the firms.

Analysis it’s effects on firms: advantages and disadvantages With the economy grows, the forms of outsourcing broaden a lot, from research and development to marketing, distribution and after-sales service, even some of the firms produce almost nothing themselves (Genem.Grossman & Elhananhelpman, 2003) For example, the manufacture of the Boeing’s third largest commercial aircraft, is outsourced to Japanese manufactures...
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