Offshore Outsourcing Pros and Cons

Topics: Outsourcing, Offshoring, Business process outsourcing Pages: 4 (957 words) Published: January 18, 2007
Advantages and Disadvantages of
RM Offshore Outsourcing Projects
CIS 564

Advantages and Disadvantages of RM Offshore Outsourcing Projects
Outsourcing has been an important alternative for the development of products and services. The shortage of skilled technical labor in mid '90 made it acceptable for corporations to rely on outsourcers. In 2000, Riordan Manufacturing (RM) opened a plant in China and moved all of its operations from Michigan to China. Riordan's mission for the future is to focus on "achieving and maintaining reasonable profitability to assure that the financial and human capital is available for sustained growth". RM, the industry leader in the field of plastic injection, employs 550 people. Outsourcing is primarily to save money while taking advantage of skills and technology not found inside of Riordan Manufacturing. Offshore outsourcing offers cost savings through reduction of salary and other related costs. "Cost saving is not the only benefit of a properly managed outsourcing relationship. Many companies seek additional benefits such as reduced time-to-market, improved product development process, improved schedule management and predictability, and increased flexibility of staffing models" (DeMassi, 2004). Outsourcing helps to reduce time to market when developmental supply expertise and skills are not otherwise available inside the organization. A good outsource relationship is a partnership based on understanding and contractually agreement. This ensures all products and services will be processed to the companies agreement. Increased flexibility in staffing deals with employees changing jobs or taking new responsibilities. "The advantage for offshore firms is created by the different costs for hiring well-educated and capable software engineers. The annual salary for a US-based applications software programmer is $75,750. In contrast, a developer with equivalent skills and experience based in...
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