CASE NO. 4

1. What is Outsourcing?

Answer:

Outsourcing is usually the term used when a company takes a part of its business and gives that part to another company. In recent times, the terms has been most commonly used for technology related initiatives such as handing over the IT help-desk to a third-party. But it can also refer to non-technical services such as handing over the telephone-based customer service department. It is an arrangement in which one company provides services for another company that could also be or usually have been provided in-house. And also a trend that is becoming more common in information technology and other industries for services that have usually been regarded as intrinsic to managing a business. In some cases, the entire information management of a company is outsourced, including planning and business analysis as well as the installation, management, and servicing of the network and workstations. Can be defined as passing of service provision or production to another internal or external party. is the process of subcontracting to a third party. Outsourcing is a controversial issue because often it means that the companies are outsourcing jobs outside of the country's economy. Outsourcing occurs when a business secures (purchases) products and/or services from a third party, as opposed to producing them in-house.

2. What are the Advantages and Disadvantages of Outsourcing?

Answer:

There are 7 Outsourcing Advantages:

1. Focus On Core Activities
2. Cost And Efficiency Savings
3. Reduced Overhead
4. Operational Control
5. Staffing Flexibility
6. Continuity & Risk Management
7. Develop Internal Staff

And most of all Outsourcing help us to save money, share risk, accommodate peak load and helps us to develop our internal staff. It reduce capital expenditure over a business process. Also management gets more time to concentrate over core competencies. This also reduces the dependency upon internal resources and increases the flexibility to meet the changing business and commercial conditions. The chief reason of outsourcing is to reduce capital expenditure over a business process. Also management gets more time to concentrate over core competencies. This also reduces the dependency upon internal resources and increases the flexibility to meet the changing business and commercial conditions.

There are 6 Outsourcing Disadvantages:

1. Loss of Managerial Control
2. Hidden Costs
3. Threat to Security and Confidentiality
4. Quality Problems
5. Tied to the Financial Well-being of Another Company
6. Bad Publicity and Ill-Will

we tend to loose the managerial control. This happens because it is harder to manage the outsourcing service provider as compare to managing one's own employees. This hidden and missed out costs of outsourcing is hard to predict causing overall costs to be underestimated. It can also prove to be a threat to the security and confidentiality of issues of a company. If your company is outsourcing business process such as payroll, confidential information such as salary will be known to the outsourcing service provider. It also result into the possible loss of flexibility in reacting to changing business conditions, lack of internal and external customer focus and sharing cost savings. Loss of internally generated talent is yet another problem associated with the outsourcing as it may hamper the growth of an employee by depriving him from the experience he would have gained by handling the business issue himself then by passing it over to some other external party.


3. What is the Implication of Outsourcing?

Answer:

Based on my understanding about Outsourcing, it is very important in terms of business. It is also great opportunity especially for the individuals who are lucky to have the job and its more advantageous for the company who is doing this kind of strategy. Let me define outsourcing first. It is getting resources or human resources outside the company or outside the country that the company is based on. The company or firm choose to have outsourcing as one of their strategies because it is very obvious especially for Internet marketing companies and manufacturing companies to work on this kind of tactic because it is cheap. The firm responsible chooses a country where they can find cheap raw materials for the product that they are making. Make sense? For web publishing or Internet marketing, when you are seeking for a human resource that will help you in creating and managing your website, what will you choose? The ones who are far from you but cheap or the ones who are near you but are very expensive. You see, to outsource a human resource, for example a writer, in the Philippines or India costs lesser than to hire a writer which is based in California. And the great thing is that, somehow Asian writers are more proficient in the English language compared to others.

Another benefit of outsourcing is the other way around. We had mentioned above that it is beneficial to companies or firm who are using it. But one of the best impact of this business strategy is the giving of more job opportunities to countries who had a low employment rate. Through this people from around the world who have the right talent for the job that the company is seeking get the chance of having a job for themselves. Also for manufacturing companies, they prefer to make a branch company in the place where they are getting their materials and because of that they have to build buildings and hire workers from that place. That will surely increase the employment rate of that particular country where the said company choose to outsource.