Outsourcing

Best Essays
Jamie D’Arco
Introduction to Outsourcing Outsourcing is when a company uses another outside company to fulfill goods or services needed for their own company in order to cut costs. Also, it is usually practiced more successfully by larger companies and businesses. For example, one company may use another outside company for call services, email or pay roll because it is cheaper than for them to have an in-house department take care of these tasks. Today there are companies that exist for the sole purpose of performing the tasks that many other companies resort to outsourcing for. Although a good amount of outsourcing does occur in different countries, it is important to remember that not all outsourcing occurs in different countries. Outsourcing can definitely cut costs and give companies a competitive edge but it is not the best resource for every company or organization.
Disadvantages to Outsourcing As we have defined earlier outsourcing is the practice of sending out specific job functions or operations to an outside company or individual. Many companies use this method to help the growth of the business and to save money. These advantages aside there are several disadvantages that could seriously cripple a company. These disadvantages include loss of control, hidden costs, threat to security, quality of service, tying a company’s well-being to another, as well as the bad publicity it could lead to. One of the few disadvantages is the loss of managerial control. When outsourcing, a company is handing over a portion of their operational control over to another company, the company being outsourced might not share the same values or being driven by the same vision as the outsourcing company. Another disadvantage could be the hidden costs that come along with outsourcing. The contract with the outsourcing company will cover the details of the services they will provide, anything not addressed in the contract could call for the company to pay



Cited: Berrera, Albino. "Who Benefits from Outsourcing?" Who Benefits from Outsourcing? Religion- Online, n.d. Web. 20 Nov. 2012. <http://www.religion-online.org/showarticle.asp?title=3115>. Bucki, James. "Top 6 Outsourcing Disadvantages." About.com Operations / Technology. About.com, n.d. Web. 18 Nov. 2012. <http://operationstech.about.com/od/outsourcing/tp/OutSrcDisadv.htm>. "EMS Industry Terms and Definitions." VentureOutsource.com. Venture Outsource, n.d. Web. 18 Nov. 2012. <http://www.ventureoutsource.com/contract-manufacturing/information-center/terms-and-definitions/3/>. "OutsourceAbout Our Definitions: All Forms of a Word (noun, Verb, Etc.) Are Now Displayed on One Page." Merriam-Webster. Merriam-Webster, n.d. Web. 20 Nov. 2012. <http://www.merriam-webster.com/dictionary/outsourcing>. "Outsourcing." Definition. N.p., n.d. Web. 20 Nov. 2012. <http://www.investopedia.com/terms/o/outsourcing.asp>. Ramirez, Courtney. "Disadvantages Of Outsourcing." - Life123. Life 123 Inc., Mar. 2012. Web. 20 Nov. 2012. <http://www.life123.com/career-money/small-business/outsourcing/disadvantages-of-outsourcing.shtml>. Reyburn, Stan. "12 Reasons Companies Outsource Operations Overseas." Shrinkage Is Good RSS. Bill Shrink, n.d. Web. 20 Nov. 2012. <http://www.billshrink.com/blog/6741/12-reasons-companies-outsource-operations-overseas/>. "What Is Outsourcing?" WiseGEEK. N.p., n.d. Web. 20 Nov. 2012. <http://www.wisegeek.org/what-is-outsourcing.htm>.

You May Also Find These Documents Helpful

  • Powerful Essays

    Outsourcing

    • 2746 Words
    • 11 Pages

    Outsourcing Former U.S. Presidential candidate Ross Perot once warned of the U.S. entry into the North American Free Trade Agreement as "a great sucking sound" as U.S. jobs "run" to Mexico. Many Americans feared that cheap labor in Mexico would cause many Americans to lose their jobs as U.S. companies could find cheaper labor south of the border. In the ten years since the beginning of NAFTA, the U.S. job market has remained strong. The types of jobs may have changed to a certain degree, but…

    • 2746 Words
    • 11 Pages
    Powerful Essays
  • Satisfactory Essays

    outsourcing

    • 30285 Words
    • 177 Pages

    No. 2005-12-A Office of Economics Working Paper U.S. International Trade Commission Growth in Services Outsourcing to India: Propellant or Drain on the U.S. Economy? William Greene* U.S. International Trade Commission January 2006 *The author is with the Office of Economics of the U.S. International Trade Commission. Office of Economics working papers are the result of the ongoing professional research of USITC staff and are solely meant to represent the opinions and professional…

    • 30285 Words
    • 177 Pages
    Satisfactory Essays
  • Powerful Essays

    It Outsourcing

    • 2647 Words
    • 11 Pages

    Department 6 2.7. Strengths and Weaknesses of Operations Department 6 2.8. Recommendation for Operations Department 6 2.9. Summary of Recommendations 7 3. Evaluation of outsourcing companies 7 3.1. Evaluation of Company 1 7 3.2. Evaluation of Company 2 8 3.3. Evaluation of Company 3 8 3.4. Outsourcing Company recommendation 8 Conclusion 9 1. Introduction Valentino’s is a dating agency which has established a name in the industry since 1976 with over 8 million customers…

    • 2647 Words
    • 11 Pages
    Powerful Essays
  • Better Essays

    Outsourcing

    • 3173 Words
    • 13 Pages

    All About Outsourcing Outsourcing can be defined in many ways. A definition from the Guide to Outsourcing in Supply Chain Management states, “We can define outsourcing as the process of moving aspects of your own company to another supplier” (169 Scott, Lundgren & Thompson, 2011). Ethanan Helpman from Harvard University defines it as “to refer to the acquisition of goods or services from an unaffiliated party” (127, Helpman, 2011) and Ashsiha Oza and Kathy Hill from Sam Houston State University…

    • 3173 Words
    • 13 Pages
    Better Essays
  • Powerful Essays

    Outsourcing

    • 8965 Words
    • 36 Pages

    New strategies of industrial organization: outsourcing and consolidation in the mobile telecom sector in India 1 Ambedkar University, Delhi, India Email: sumangala@aud.ac.in Sumangala Damodaran1 May 2013 Capturing the Gains 2013 Working Paper 32 ISBN : 978-1-909336-87-2 Abstract The paper discusses the experience of the mobile telecom sector in India in terms of its business organization. There is a high level of outsourcing of activities, including those such as network…

    • 8965 Words
    • 36 Pages
    Powerful Essays
  • Better Essays

    Outsourcing

    • 4675 Words
    • 19 Pages

    part 3.1 Outsourcing definition and types 3.2 Outsourcing and its effect on business 3.3 Outsourcing pros and cons 3. Conclusion 4. Bibliography Introduction The term outsourcing comes with many preconceived connotations, both positive and negative, thus the study of the mechanisms for effective use of outsourcing as a business development tool is also clouded with these perception issues. Much of the academic study of outsourcing revolves around…

    • 4675 Words
    • 19 Pages
    Better Essays
  • Better Essays

    Outsourcing

    • 2686 Words
    • 11 Pages

    Outsourcing is the delegation of tasks or jobs from internal production to an external entity; this practice is used by different companies to reduce costs, by transferring significant portions of work to outside suppliers. Most recently, it has come to mean the elimination of native staff and the hirer of overseas staff, where salaries are marked notably lower. So, the question then becomes what is the major reason that companies are going to outsourcing rather than hiring people within their own…

    • 2686 Words
    • 11 Pages
    Better Essays
  • Powerful Essays

    Outsourcing

    • 2398 Words
    • 10 Pages

    Outsourcing Contents. 1 Abstract 2 Introduction 3 Fundamentals 4 The Main Strategy 5 Successful Outsourcing 6 Conclusion Outsourcing and how it can help IT Managers enhance their projects. Abstract With computer systems / projects and there implementations getting more complex with every day that passes , the tendering of IT responsibilities to external parties is becoming more and more attractive to the IT Managers of large organisations. The…

    • 2398 Words
    • 10 Pages
    Powerful Essays
  • Good Essays

    Outsourcing

    • 4879 Words
    • 20 Pages

    ABSTRACT Outsourcing refers to a company that contracts with another company to provide services that might otherwise be performed by in-house employees. Many large companies now outsource jobs such as call center services, e-mail services, and payroll. These jobs are handled by separate companies that specialize in each service, and are often located overseas. There are many reasons that companies outsource various jobs, but the most prominent advantage seems to be the fact that it often saves…

    • 4879 Words
    • 20 Pages
    Good Essays
  • Better Essays

    Outsourcing

    • 1183 Words
    • 5 Pages

    La Consolacion College Manila #8 Mendiola St. Manila School of Business and Accountancy The Advantages and Disadvantages of Human Outsourcing John Albert P. Corpuz Krista Nina C. Datu Kenneth L. Gloria Mark Anthony M. Go Jervy S. Sanchez Maria Victoria C. Semsem December 20, 2012 Introduction: In our present day situation, many things are really fast changing not only the technology that we are using but also the things that constitute our daily living, and to be specific, the…

    • 1183 Words
    • 5 Pages
    Better Essays