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Outsourcing: For and Against
Transcript of Outsourcing: For and Against
What is Outsourcing?
What is Outsourcing?
Contracting, Sub-contracting, making an arrangement or sub servicing a part of the internal business process with an outside company.
Going "out" to find the "source"
FOR And Against
Tied to the financial well-being of another company.
Extreme consequences if the outsourcing company goes bankrupt.
Things to consider:
Foreign country's economy and government.
Foreign country stability.
Threat to security and confidentiality of information.
Sensitive information disclosed
Sharing of confidential information.
Decrease competitive advantages
Skip production steps
Choose cheaper resources
Creating low quality products
Customer satisfaction and quality can decline
Reasons Company Might Consider Outsourcing
Reduce and control business and operating costs and avoid overhead costs ( eg higher taxes or higher energy costs)
Time saving (concurrently)
The ability to focus on core business
Improve the accessibility of resources that may not be available within
With an efficient management of resources the company can expand and grow
Global Talent Pool
Increasing English literacy
Nike+, Pebble Watch
LOSS OF KNOWLEDGE
Unable to maintain skillful workforce
Loss of understanding, expertise, and process knowledge
Results in lacking R & D
Difficult to innovate and generate profit
INTERNAL LABOUR RISKS
EXTERNAL LABOUR RISKS
Low employee productivity
Low employee morale
Loss of organizational culture
Decline in operational quality
Not upholding organizational standards
Difference in employee practices, quality standards, performance measures