Outsourcing And Offshoring Essay

Outsourcing And Offshoring Essay-75
The worldwide economic recession has forced companies to explore all options to increase efficiencies and cut costs.

The worldwide economic recession has forced companies to explore all options to increase efficiencies and cut costs.

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While the benefits of outsourcing and offshoring largely overlap, they do not face the same disadvantages.

Outsourcing, when done within the country, does not face the same political criticism of loss of jobs.

There are several reasons for companies to both offshore and outsource. There are several reasons why a company might outsource.

While this can be a politically sensitive topic, management experts generally agree that outsourcing - when done right - increases competitive advantage with a natural division of labor that evolves in any society.

There are, however, risks associated with offshoring.

These include project failure due to poor communication; civil or political unrest impacting production or service delivery; arbitrary changes in economic policy of governments may force unncessary restrictions on MNCs; and poor infrastructure in the developing country may affect quality or timeliness.There are several best practices that have evolved over the past two decades to mitigate risks and improve outcomes of projects that are offshored and outsourced.Many of these practices are related to business processes.This is usually done when companies believe that their offshore centers for production/service will provide them with an edge over the competition.Offshoring and outsourcing have both been subject to a lot of criticism, especially from a political standpoint.It is also possible to offshore work but not outsource it; for example, a Dell customer service center in India to serve American clients.Offshore outsourcing is the practice of hiring a vendor to do the work offshore, usually to lower costs and take advantage of the vendor's expertise, economies of scale, and large and scalable labor pool.This is especially true in the case of manufacturing - with China being a leader - and information technology services, with India leading that space.Business process outsourcing is another area of offshoring that has grown tremendously.Just as offshore outsourcing combines the benefits, it is also susceptible to the risks of both business practices.Critics claim that these risks are magnified because of the complexity being multiplied.


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