Offshore Outsourcing Essay

1574 words - 6 pages

Outsourcing is simply the farming-out of services to a third party. Offshore outsourcing is majorly used in IT related task for which internet plays a vital role along with work related to sales & marketing, finance, human resource & administration, etc. Quality and effective risk management are two integral parts of offshore outsourcing services. Offshore outsourcing allows businesses to reduce costs, gain staffing flexibility and increase revenue, gain competitive advantage, decrease cycle time, increase shareholder value, improve customer loyalty and ultimately allows a business to focus on its core competencies. An example of offshore outsourcing is the very well known clothing based company called Gap Inc. which outsources its production from Indonesia to reduce its cost & to gain an advantage in the global market.

Brands like Armani, Polo, Nike, GAP etc. have their manufacturing unit in emerging markets like India, China, Thailand, etc. Cost reduction is one of the major reasons for western companies from U.S.A., U.K, France, countries to opt for outsourcing. Outsourcing of activities incurring high indirect costs generate cost reductions. Costs incurred for recruiting, motivating and training of staff is reduced due to the difference in value of currency. One such company is Louis Vuitton, a French brand outsourcing its processes from emerging countries like India & China. The time difference between the companies enables the production to be carried 24/7. Outsourcing enables redistributing resources to the core areas within the company that have direct impact on profitability. Countries where the taxation & government regulations are unfavourable, explore to other countries where the same are favourable thus, the companies also explore new markets. Therefore, better predictability, quality & risk management can be facilitated. Furthermore, the company achieves better standardized processes.

Outsourcing is not always driven by cost reduction; there are also other considerations to outsource such as better quality or access to technological capabilities which are unavailable internally. There is a risk associated of misuse of the firm’s intellectual properties by the external company. There can also be trouble in coordination due to the distance between the firms.
Other reasons for lack of coordination can be due to difference of ideologies, mindsets and working patterns. A company’s unique selling point can be based on specific knowledge and certain competences which provide competitive advantages and high return on investments to the firm. By outsourcing these firms provide specific competences to an external provider who is relatively unknown, through which competitiveness can be at stake copied. What if the supplier takes advantages from it by copying? This was studied in the case of Louis Vuitton whose products were copied by China & India & sold at other countries at a relatively cheaper...

Find Another Essay On Offshore Outsourcing

Offshore Outsourcing: How Should Policy Respond?

2641 words - 11 pages a problem that can be fixed if only half of the issue is addressed. References Job Outsourcing Statistics. (2014, January 1). Retrieved March 25, 2014, from Bhagwati, J., Panagariya, A., & Srinivasan, T. N. (2004). The Muddles over Outsourcing. The Journal of Economic Perspectives, 18(4), 93-114. Mankiw, N., & Swage, P. (2006). The politics and economics of offshore

IT Offshore Outsourcing; the uncertain future of American IT workers

3035 words - 12 pages IT OFFSHORE OUTSOURCING:The uncertain future of American IT workersOffshore outsourcing refers to services that a client company contracts from a vendor located abroad. These services often include labor, infrastructure or capital. More often in the last three to five years, offshore outsourcing refers to the information technology work performed for American companies by overseas Information Technology (IT) companies. What began over a decade

An Assessment Of & a Framework For Successful Offshore Outsourcing

4533 words - 18 pages 1. An Introduction to the academic report:The aim of this assignment is to explore offshore outsourcing in the information systems (IS) environment and to understand the approach to achieve competitive advantage through outsourcing. To recognize the benefits that make outsourcing a highly regular practice, the downsides and the apprehension associated with IS outsourcing and the key steps implementers must take to ensure its success. The

An Ethical and Global Analysis of Software Offshore Outsourcing

2764 words - 11 pages An Ethical and Global Analysis of Software Offshore Outsourcing Introduction Before acquiring its current negative connotation, outsourcing referred to the practice of turning over parts of a business to a company that specialized in that activity. For instance, Cisco Systems, Brocade Communications, and other leading original equipment manufacturers (OEMs) outsource their manufacturing to Solectron Corporation, where I was a summer

Outsource Report

795 words - 3 pages Over the past few years, offshore outsourcing has taken a new meaning for the American economy. Outsourcing began decades ago in manufacturing and recently expand to include some of the most highly skill jobs especially in the Information Technology (IT) industry. McKinsey Global Institute estimates that eleven percent of the 1.56 billion service jobs worldwide could be outsourcing or performed remotely. MGI also projects that the total

What is outsourcing

2180 words - 9 pages and low end. There are pros, cons, positives and negatives. For example, if you are a cost-cutting director at a competitive company, the mention of outsourcing, especially offshore, may bring a smile to your face. For computer programmers, call center workers, or factory workers the reaction is likely to be more negative. The primary pro is that outsourcing jobs outside of the U.S. may help to encourage trade and actually create a stronger

Disadvantages of Business Process Outsourcing

1979 words - 8 pages 2015. The job cuts represent around 15 percent of the group's current headcount of 64,000. (CNBC News, 2012). When companies outsource a job, they typically eliminate the department that used to do it. Although offshore outsourcing definitely has more than two problems and management skills is required to overcome them, this report will examine the case of UBS investment bank operations outsourcing and discuss two challenges for management: UBS

The External Environment for the Development of Foreign Package

1927 words - 8 pages flows to 21; in the "Shared Services Centre" A, China ranked 8, the project inflows 9, while the top-ranked India 108; in the "R & D Center" A, China ranked second for the 368. According to Kearney on the ability of countries to attract offshore outsourcing a comprehensive assessment of China ranked second after India, China is the biggest developed country firms attractive to talents. • Roland Berger in an interview with multinational companies

Differences Between Internation Strategy and Global Strategy

1809 words - 8 pages approaches. For such comparative benefits will help the companies to maintain their market share and increases their profits. With global outsourcing, it will help companies to find new source such as the low labour cost, rare materials, and of course the new market opportunities. And for example, Malaysia manufacturing is headed offshore, Companies that needed to be aware not only to their susceptibility to competition, and from low wage

Outsourcing American Jobs

1564 words - 6 pages are provided by the vendor. For long-term services, the vendor has full responsibility for delivering the service; the outsourcer provides only a liaison. The Negative As with so many global trends, there is significant disagreement over the implications of global competition in services for American prosperity and competitiveness. Many people are pessimistic about the impact of offshore outsourcing at a time when American workers are

Outsourcing, Good for Business?

825 words - 4 pages positives that outsourcing may have had on the United States are largely outweighed by the numerous negatives, Works Cited

Similar Essays

Offshore Outsourcing Essay


Offshore Outsourcing Essay

2080 words - 8 pages Offshore outsourcing is the process whereby a company contracts a supplier that operates overseas to perform certain tasks or services that are part of the goods or services that the company provides. Offshore outsourcing has become a rising phenomenon in the United States for about the past 20 years, with jobs being transferred to Southeast Asia, South Africa and parts of Europe. Two hundred and thirty thousand jobs are outsourced each year

The Benefits Of Offshore Outsourcing Essay

968 words - 4 pages If offshore outsourcing has such a negative impact on the economy, then why are businesses practicing it? Is it just because of greed? Actually, offshore outsourcing can promote economic growth in some ways. First off, what exactly is offshore outsourcing? Simply put, offshore outsourcing is a business tactic where a company sends a part of their service to another country to be run by a different company. Offshore outsourcing has been seen

Offshore Outsourcing: Good Or Evil? Essay

1977 words - 8 pages country as the computer manufacturer, or they may live overseas. In the latter case, their employment by the manufacturer is called offshoring or offshore outsourcing. Offshoring is not always a form of outsourcing, however; for example, the abovementioned computer manufacturer could build a plant in a foreign country and hire local residents to work in it as regular employees. In this case, the company is engaging in offshoring, but not