Gone are the days when merchant ships would take months and planes would take days and weeks to sail or float around the world from one seaport or airport to another or travel from one part of the country to the other. Science and technology have shrunk distances. Outsourcing is the transfer of production of goods and services by one company to another independent company usually for cost benefits (Keat & Young, 2009). The practice has been around for years and is also known as offshoring when it involves a company in another country. Many large explore the financial advantage of outsourcing as far as to other countries where separate specialized companies located overseas handle different tasks and services. Outsourcing has revolutionized business in all areas, from manufacturing to human relations and promoting rapid business growth. I have personally experienced the benefits of outsourcing where housekeeping and security were always a problem at my former school but when the university authorities contracted those activities to an outside company there was immediate and lasting improvement probably due to their expertise in handling such business.
There are many reasons that companies outsource various jobs however, the most important advantage is to save money. Many of the companies that provide outsourcing and offshoring services are able to do the work for considerably less money either because they do not have to provide benefits to their workers have fewer overhead expenses or have cheap labor as prevalent in China. Thus it is often more cost effective to outsource to China and other countries that are more affordable. Outsourcing also allows companies to concentrate on other business issues such as new product developm...
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...er unexpectedly pulls out on their contract. In addition there may be hidden costs that could become a problem in future. Recently, labor rates and benefit packages in China are increasing as well as shipping rates, taxes, customs services and duties all of which must factor in when deciding on offshoring to the country. Likewise, the value of foreign currencies is appreciating, making overseas production less profitable (McCormack ,2011). Fortunately, the global economy is now technologically driven and even more, with the use of Internet where payments are guaranteed prior to incurring physical costs associate with exporting or outsourcing products, payments would have been guaranteed. Therefore, most of the disadvantages can be addressed by e- monitoring and proper research prior to outsourcing and in-service training to bridge language and cultural differences.
The very existence of offshoring is in and of itself evidence that, at least in most cases, it is advantageous for firms to engage in offshoring. However, as is the case with most business activities, its externalities can affect various stakeholder groups in both positive and negative ways. In society’s view, stakeholders to consider are Canadian workers, Canadian consumers, competitors, shareholders and executives, citizens of other countries, and future generations.
Offshoring American jobs have positive and negative consequences to the American community. Some of those consequences of offshoring American jobs include Amer...
Outsourcing simply means acquiring services from an external organization instead of using internal resources (Butler, 2000). By using outsourced resources, organizations can gain a competitive advantage by utilizing contingent staff to accomplish strategic goals without incurring the fixed overhead. By focusing on the leading edge and highly specialized skill sets, outsourcing providers can often offer higher quality services, or at a lower price than the client organization. Typical reasons for outsourcing go beyond simple contingent staffing. Outsourcing providers are able to maintain economies of scale with regard to specialization (...
Recently outsourcing has been in the news, especially during political election years. It seems to be a phenomenon that is causing much concern among the population. But exactly how is outsourcing effecting both workers and businesses? And is it as big of a problem as politicians describe?
Offshoring or offshore outsourcing is the practice of a company or a firm hiring or contracting in utilizing the services, skills or labor of the personnel from an outsourcing service provider that specializes in the need that they are looking for such as develop systems, customer service or even write code either from a developing or under developed countries, in their efforts to lower their operational costs and improve their service efficiencies and quality of their products. The former company is called ‘the Outsourcer or the Client’ who pays the money for the services obtained and the later company is called ‘the Outsourcee’ for providing the services to the outsourcer.
Both sides can agree that outsourcing can be desirable for a business do to the potential profit. It allows goods to be made cheaper, management to run smoother, and money to be made faster (Salanţă 270). Both sides can also agree, however, that U.S. jobs are lost as a result of outsourcing (Ahmed 192), as well as environmental damage being cause due to corporations taking advantage of loose environmental regulations (Marquis 39). Upon digging deeper into this debate, one can find that both sides present very convincing arguments.
Since the concept of outsourcing was introduced it has been a subject of debate between politicians and citizens of the United States. Remarkably, it was the United States who supported outsourcing and now it is the United States that feels its economic progress is being threatened by outsourcing. One may argue that the financial situations that existed two decades earlier are not the same as they are today, thus the change of time, business priorities of economies have also changed.
With the United States’ economy in a depression and our unemployment rate skyrocketing to record highs, job-outsourcing has moved to the top of the list of controversial issues. Froma Harrop’s essay New Threat to Skilled U.S. Workers and Thomas Friedman’s essay 30 Little Turtles discuss two different viewpoints of job-outsourcing, and their effects on society. Does our government really want to cut back on job-outsourcing, and what can society do to help the issue? Friedman’s standpoint on job-outsourcing shows how it is emotionally beneficial to other countries and Harrop’s factual standpoint shows job-outsourcing regulation, however, I feel that our citizens are unaware of the opportunities and our government is eager to send the jobs overseas.
In this paper, I will discuss the ethics of outsourcing manufacturing from my local community to a developing country. I will view this debate through three different frameworks: Utilitarianism, Pragmatism, and White’s biblical principles. I will also conclude my final view on outsourcing and the benefits of using a framework for making ethical decisions.
Outsourcing is when a company or business decides to contract part of their services that they do not do well to an outside company. There is two types of outsourcing offshoring and nearshoring. Offshoring is where a company outsources abroad and, nearshoring is outsourcing within the home country. The reasons that a company decides to outsource varies from company to company but, the most common ones are cost reduction, increasing globalization, growth , tax incentives, government support and access to new markets. However there are some key challenges that come with offshoring and those key challenges are quality and labor retention. ( Bacon, 2007 p 38-39). Asian outsourcing began as early as the 1960’s (Espana 2013 p 3). Some people argue that offshoring is good for the economy even though it’s a well know fact that offshoring has a negative effect on the economy, there is wage differences and the unemployment rate increase.
Hiring workers in foreign countries can allow your company to work around the clock, because workers are in different time zones. Also workers in other countries maybe more proficient with technical and service skills and improve overall performance. Outsourcing can eliminate investments in capital, such as computer equipment and office space. The money saved can be used to invest in day-to-day operations.
There are many reasons for a company to want to outsource the services or products that they need or want. Six of the biggest reasons for companies to outsource are motivation, specialization, survival of the economically fittest, economies of scale, heavier market coverage, and independence from any single manufacturer.
Usually the firms to which the activities are outsourced are specialized in their area of work and so the parent firm gets the advantage of getting the work done through competent employees. Therefore, outsourcing gives competitive advantage to the companies which can be easily sustained by them without much effort.
Outsourcing is a technique for companies to reassign specific responsibilities to external entities. There are several motivations for outsourcing including organizational, improvement, cost, and revenue advantages (Ghodeswar & Vaidyanathan, 2008).
Big organizations often do this because they want to save money and produce cheaper products for the customer, so that they feel like they got an impressive deal. When Americans hear the word “offshore outsourcing”, they automatically assume that Americans are losing their jobs to foreign countries. Most of these jobs that companies outsource, such as the garment industry jobs, are offshore outsourced because they are labor intensive jobs. According to Timmerman “they do, and Nari tells me what each girl does during the process.