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Exploring The Benefits Of Outsourcing Essay

2285 words - 9 pages

The purview of this paper is designed to encompass the outsourcing of jobs in the manufacturing sector of the United States' economy. Beneficial and disadvantageous elements of globalization will be exposed within the respective boundaries inclusive to the outsourcing of U.S. industry jobs.
Corporations in the United States should continue to pursue global trade through the outsourcing of in-house manufacturing. In-house manufacturing refers to production managed and orchestrated by an organization's own employees, often using internal staff and resources. An alternative to this is the concept of outsourcing, defined as the process through which companies contract internal functions, such as the manufacturing of products, to external providers (Parry). Offshoring is a term specifically used to describe the practice of relocating internal functions to foreign countries in an effort to reduce labor or production costs.
Businesses benefit from the cost advantage of outsourcing non-core jobs such as manufacturing. The ability to relocate capital, technology, and resources across almost the entirety of the globe poses a considerable advantage for corporations aiming to lower the cost of production (Dorgan). It also transfers the risk of production and shifts the cumbrance of maintaining infrastructure to the external provider (Koulopoulos). An external provider denotes a company that functions to supply goods or services for another company. For the purposes of this paper, the terms “supplier” and “external provider” are regarded as synonymous.
Kate Vitasek et al. state in Vested Outsourcing: “Usually, if a process is not core to the organization, it is a candidate for outsourcing” (4). Thomas Koulopoulos, an expert on information technology's interrelation with global organizations, asserts in Smartsourcing that ultimately the primary objective of outsourcing consists of contracting “areas of liability”, or non-core processes, and broadening the “areas of core competency” (110). Determining whether or not a process is “core” is dependent on the organization under assessment, but in most cases processes deemed core are not viable for outsourcing, as tasking them to an external provider will create a competing business or cause the organization's dissolution (Tiunov). Conversely, non-core activities can be shed to suppliers and potentially save time and resources. Assembly work has optimal cost reduction potential due to the low amount of capital involved (Saleem).
In this vein, some products cost less to be produced by an external provider located either abroad or domestically. U.S. companies would have to pay more to have these products manufactured in-house. Therefore, outsourcing or offshoring allows businesses to contract manufacturing jobs to the most efficient and least expensive supplier while maintaining the same quality in their products. Access to the spectrum of global markets allows businesses to contract...

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