Global Outsourcing Advantage and Disadvantage?

Question

What are some Advantage and disadvantage for the United State from global outsourcing / jobs.

Answer 1

Advantages of Outsourcing

The Outsourcing market is estimated to grow tremendously in the coming few with an increasing number of companies planning to outsource both low end and high end jobs to offshore destinations. Also the number of companies providing outsourcing services is on the rise, thus resulting in larger variety. Due to the fact that more and more companies are outsourcing, the risks are getting smaller as businesses have more experience and clearer objectives.

There are several marked advantages of outsourcing:

1. Concentration on core business areas
Back office operations of a company require high maintenance and specialized attention. Yet most of them are critical for the company's everyday activities. By outsourcing their back office operations businesses can concentrate on their core competencies while their back office operations are being managed smoothly by a specialized third party company.

2. World-class technology at lower rates
Investing in new technology is very costly and often risky. As the technology market develops rapidly, it is difficult to keep up with latest innovations and solutions. Thus outsourcing to companies that have the resources, expertise and desire to continuously update their technological solutions, offers a true advantage of outsourcing.

3. Skilled manpower at affordable prices
Outsourcing gives a company the ability to get access to skilled and trained man power at extremely low rates. This in turn leads to an increase in productivity as well as cost savings. By outsourcing a company saves on recruitment, training and other human resource costs it would otherwise have to maintain internally. Also an advantage of outsourcing is that a company is able to utilize the kind of expertise it could not internally provide.

4. Increased productivity
By employing skilled manpower in larger numbers at lower costs companies can really increase their productivity. This in turn would result in better customer satisfaction and increased profitability.

5. Beat Competition
In today’s fast paced global economy a company needs to provide high-quality services to its customers in order to retain them, as well as provide the services for cheap prices. Outsourcing in this case can help the company maintain lower rates with better service solutions, thereby giving them a better market position or even a competitive advantage.

6. Tax benefits
By selecting the right BPO destination companies can save up on taxes in turn saving on costs.

Disadvantages of Outsourcing

Although there are several reasons in favor of outsourcing, a company must also consider the disadvantages of outsourcing. There are risks that need to be analyzed whenever a company embarks on a new business venture. Even though outsourcing is often the right solution for companies, one should not outsource simply for the sake of outsourcing. Several benefits and value addition have to be realized in order for companies justify outsourcing. It is a hot trend nowadays and seems an attractive option for many, but if the risks are not considered in detail, the disadvantages of outsourcing may dominate the advantages.

Lately however, the concept of outsourcing has been criticized. The negative attitudes toward offshore outsourcing have been mostly discussed by parties in the US and UK, due to job losses in the mentioned countries. Some people in countries like the US, feel that outsourcing is threat to their economy. Outsourcing jobs to offshore destinations, is causing unemployment in the minds of some people. It cannot be denied that the immediate effects of outsourcing such as lay-offs as well as the shifting of production and jobs to foreign locations causes problems many employees. Both high and low-end jobs are moving out of the US causing people to loose jobs. The needs of companies, national economies and those of individual people often clash.

The disadvantages of outsourcing may include the following:

· Loss of managerial control, because it is more difficult to manage outside service providers than managing one’s own employees working possibly in the same building.
· Often the hidden costs are difficult to calculate or prepare for. These include legal costs related to putting together a contract between two companies and the time spent to coordinating the contract.
· Another disadvantage of outsourcing can be a threat to security and confidentiality. If your company is outsourcing processes like payroll, medical transcriptions or other confidential information, a company must be very careful in choosing which process it wants to outsource and to which provider.
· A possible loss of flexibility in reacting to changing business conditions, lack of internal and external customer focus and sharing cost savings may also be a disadvantage of outsourcing.
· Other disadvantages of outsourcing may include unfavorable contract lengths, loss of competitive edge, problems in contract renewal, and contractual misunderstandings.

Answer 2

Disadvantage Of Outsourcing

Answer 3

Advantages and Disadvantages Of Outsourcing:

Pros:
1. Cost advantages - The most obvious and visible benefit relates to the cost savings that outsourcing brings about. You can get your job done at a lower cost and at better quality as well. Due to the difference in wages between western countries and Asia, the same kind of work that is done over there can be done in India at a fraction of the cost. There is a cost savings of around 60% by outsourcing your work to India. Plus, the quality of the services provided is high thereby ensuring that low-cost does not mean low-quality.

2. Increased efficiency - When you outsource your business needs to an outsourcing partner like Flatworld Solutions, they bring years of experience in business practices and expertise in delivering complex outsourcing projects. Thus, they can do the job better with their knowledge and understanding of the domain. This leads to an increase in productivity and efficiency in the process thereby contributing to the bottom-line of your company.

3. Focus on core areas - Outsourcing your business processes would free your energies and enable you to focus on building your brand, invest in research and development and move on to providing higher value added services.

Cons:
1. While outsourcing services such as payroll processing services and tax preparation services, your outsourcing provider will be able to see your company’s confidential information and hence there is a threat to security and confidentiality in outsourcing.

2. When you begin to outsource your business processes, you might find it difficult to manage the offshore provider when compared to managing processes within your organization.

3. Offshoring can create potential redundancies for your organization and your employees might express lack of interest or lack of quality at work.

4. Your outsourcing provider might not be providing services only for your organization. Since your provider might be catering to the needs of several companies, they will not be able to give your company 100% attention.

Answer 4

What is Global Outsourcing?

Outsourcing is an allocation of specific business processes to a specialist external service provider. Most of the times an organization cannot handle all aspects of a business process internally. Additionally, some processes are temporary and the organization does not intend to hire in-house professionals to perform the tasks.

Once the task is outsourced to the service provider, he will take the responsibility of carrying out the tasks and maintaining the organization’s assets.

However prior to outsourcing any component of your business to a third-party vendor, it is essential to understand the advantages and disadvantages of outsourcing. Although outsourcing presents a variety of benefits to your organization, it could also pose difficulties if not outsourced to the right service provider.

The Advantages of Outsourcing

1.Swiftness and Expertise: Most of the times tasks are outsourced to vendors who specialize in their field. The outsourced vendors also have specific equipment and technical expertise, most of the times better than the ones at the outsourcing organization. Effectively the tasks can be completed faster and with better quality output

2.Concentrating on core process rather than the supporting ones: Outsourcing the supporting processes gives the organization more time to strengthen their core business process

3.Risk-sharing: one of the most crucial factors determining the outcome of a campaign is risk-analysis. Outsourcing certain components of your business process helps the organization to shift certain responsibilities to the outsourced vendor. Since the outsourced vendor is a specialist, they plan your risk-mitigating factors better

4.Reduced Operational and Recruitment costs: Outsourcing eludes the need to hire individuals in-house; hence recruitment and operational costs can be minimized to a great extent. This is one of the prime advantages of offshore outsourcing

The Disadvantages of Outsourcing

1.Risk of exposing confidential data: When an organization outsources HR, Payroll and Recruitment services, it involves a risk if exposing confidential company information to a third-party

2.Synchronizing the deliverables: In case you do not choose a right partner for outsourcing, some of the common problem areas include stretched delivery time frames, sub-standard quality output and inappropriate categorization of responsibilities. At times it is easier to regulate these factors inside an organization rather than with an outsourced partner

3.Hidden costs: Although outsourcing most of the times is cost-effective at times the hidden costs involved in signing a contract while signing a contract across international boundaries may pose a serious threat

4.Lack of customer focus: An outsourced vendor may be catering to the expertise needs of multiple organizations at a time. In such situations, vendors may lack complete focus on your organization’s tasks

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