OUTSOURCING- It’s Pro’s & Con’s
BY- Harshaanth Ahuja Shadi shalash
Outsourcing is regarded and considered as one of the most powerful trends in modern management. The rationale for outsourcing some functions and/or processes includes substantial financial/upcoming economies, increased ability to focus on strategic issues, access to new and up-to-date technologies and specialized expertise, and an ability to demand measurable and improved service levels with reduced customer/client lead times. (Prof. Matildaa- University of National & World Economy) Outsourcing is a business arrangement in which one organization contracts with another organization to perform services that it normally would have done itself. This occurs generally in areas outside of an organization's core competencies in order to take advantage of cost savings, access to better technology, equipments, expert services and opinions. An Outsourcing deal may also involve the transfer of the employees and assets involved to the Outsourcing Business Partner( Essay Empire.com, 2004). Outsourcing has been growing both domestically and internationally during the recent years. Contemporary highly competitive environment in which today’s businesses operate acts as a strong stimulus for firms to outsource. In addition, economic globalization facilitates the process of searching for opportunities on the open global market to outsource some of the firms’ activities instead of performing them on their own. The role of outsourcing practices in the process of economic globalization is clearly outlined by the leading international consulting companies such as Wipro of India and Sutherland of Egypt. (Prof. Matildaa- University of National & World Economy) Outsourcing is also seen as an effect of rapid globalization. Outsourcing, especially to India, China, Egypt, Philippines, South Africa, Thailand and Indonesia is deeply rooted in increasing globalization and global economy of scale (Kriegel, 2004). To attain and maintain global competitiveness, it is wise for the companies to transfer their high-cost professional jobs to low-cost countries (Essay Epmire.com) thus allowing them to achieve their organisational goals at reduced costs while maintaining quality standards.
Outsourcing has become one of the key ingredients in formulating the overall corporate recipe to succeed in today’s emerging and highly competitive global marketplace (Sypher.in- Research Paper on India). Outsourcing is not a new phenomenon in the world managerial & business practices but still rapidly develops establishing the beginning of a new stage of international division of labor (Prof. Matildaa- University of National & World Economy). Outsourcing differs from alliances, partnerships or joint ventures in that the flow of resources is one-way, from the vendor to the outsourcer; typically, profit sharing or mutual contribution are not a common practice involved in outsourcing (Belcourt, 2006). In today's world, most successful companies are also beginning not only to outsource unskilled manual labor tasks but also white-collar tasks. Companies like Wipro Computers, Dell Computers, Sutherland and Cisco Systems rely on their suppliers to do their development work. Dell Computers focuses on the few aspects it performs well and outsources the rest of its responsibilities (Woody, 2004). Wipro...
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