Advantages and Disadvantages of Outsourcing †MyAssignmenthelp.com

Question: Discuss about the Advantages and Disadvantages of Outsourcing. Answer: Introduction Outsourcing is a type of business strategy to operate business functions. It can be a permanent or a temporary strategy to bridge the gap in staffing, to have better quality techniques and improvement in product design. This type of business practice has become popular in these days and become more controversial in the last few years. Outsourcing business functions have been a topic of interest that has been highlighted outsources employees in order to keep their companies blooming. Some businesses outsource to hire another company that specialized in the features the company may need. Outsourcing can be effective and beneficial and it means hiring a third person to perform the needs of the operation. Offshore outsourcing is when those needs are fulfilled in another country (Duck, 2006). The research in this literature review will cover the advantages and disadvantages of outsourcing business functions. The advantages and disadvantages of outsourcing business functions will be highli ghted. After research is conducted, a professional opinion will follow as to whether it is in the best interest of the organizations to utilize this business practice. Many businesses in developed countries have been able to run their business functions due to outsourcing but lost their national jobs. As in the US, outsourcing business runs successfully but many Americans lost their jobs. The professionals are in opinion on whether this practice should continue or not. The developed countries like US, Australia, generally they outsource their business to other countries, when the jobs get out the source from a parent location to a secondary location, unemployment get created at parent location (Duck, 2006). The research conducted will help to analyse these types of conditions. Onshore outsourcing means when a company hires a business, other than their own and need specialized features (Duck, 2006). That the business is looking for the commonly outsourced areas such as business centres, gift shops, and IT services, to run by the owners or have someone else to run them. Many businesses outsource some of the functions a service offshore. Offshore outsourcing can be done all around the world. The companies outsource their functions because they need highly skilled and talent in a specific area and not have to carry them on the company payroll (Pope, Key and Saigal, 2015). For example If a person wants to install a new computer system, he might have needed one IT person and outsource beyond that. Some companies outsource to save money on expenses and wages. Generally, companies outsource for the reduction in efficiency and labour cost and for this it became more efficient to have a valet company who have knowledge of business and experienced to make this function successfully (Fariborzi, 2012). Some companies outsource to save money on expenses and wages. Payroll is the largest cost for companies. The average wage of outsourcing someone in India is cheaper as compared to the U.S. This saves companies income and this is the basic reason that country like the U.S. outsources their business to India and China. This may help to run the business for the onshore employees (Pope, Key and Saigal, 2015). Many companies realize that outsourcing the business functions may become the reason of loss in business due to quality service, language, culture. Etc. Some other companies do not outsource because they want to have full control over their own business functions (Pope, Key and Saigal, 2015). Areas those are beneficial to Outsource Onshore Face to face- The business that requires face to face and eye contact are more beneficial to outsource. The areas those are a little bit to do with the expertise of the main functions. A company must perform their own expertise internally (Patricia, 2017). Companies trained their own staff and it is beneficial to have full control over training, it helps with on the constructive critics and progressive discipline. It would be wise to keep services involving local needs onshore. For example In a hotel business, it is beneficial to have local staff, as someone who lives in a local area can only give better information regarding services provided to the guest (Fariborzi, 2012). Outsourcing business functions allow organizations to concentrate on their core business. When functions are outsourcing, it becomes easy for the organizations to deal with other functions properly (Fariborzi, 2012). For example-In grocery shop, a florist is hired for flower counter, it becomes easy for the owner to focus on the other counter as he dosed not have much knowledge regarding flower, but outsource his work to florists helpful increasing his sales revenue. Area that is beneficial to Outsource Offshore A service that takes someone sitting at a desk to help them offshore outsourcing would be better and beneficial for any company (Glaister, 2013). For example- Reservations for train tickets plans other tickets would be a good area to outsource offshore because most of the people do not meet their reservation agents. Outsourcing business functions provide an organization exposure to vendors specialized system. This specialization provides more efficiency in work performance that allows producing high quality of work and saves time. There can be a chance of cost saving when business functions are outsourced perfectly. The cost saving that includes employee compensation costs, business expenses and other costs related to production and manufacturing setup are eliminated and can be free up resources for another useful purpose (Alexander, 2012). To run production offshore in a country where the labour cost and the production cost will be cheaper is beneficial for the business. For example- U.S. has corporate taxes; this can help a company save their capital (Alexander, 2012). A company may be offshore outsourced in an area where they get cheaper material for their production. Positive Impact of Outsourcing There are various companies that enjoy outsourcing because they are not focused on human resource functions for the employees. The outsourced companies bothered about the employment aspects of the business they are providing. In certain situations, like, if the outsources employee gets ill, or some emergency occurs, the outsource company will pay the extended sick leave. The company handles the financial burden of their employees, who can perform better in their work offered by the host company (Glaister, 2013). Therefore there are various advantages of outsourcing the business functions and it became important to understand the business practice and to consider the requirement of the business. Many economists believe that Onshore outsourcing can severely hurt the image of any business, and can cause a huge customer service liability. It can be a negative impact to the company that should anything goes wrong (Globaloutsourcingagency.com, 2017). Sometimes the outsourced company and the parent company do not use the same type of communication and network process; this can create delays and wastage of time for clients. Efficiency is a high priority in developed countries and even a small delay can cause a loss of business and also affect the market image of the company (Globaloutsourcingagency.com, 2017). People in developed countries such as America, Australians are less accepting of offshore outsourcing. People want companies hiring local citizens and they dont want the non-citizen person receiving a salary check and that should be given to their own citizen people that are willing and able to do the work (Khan, 2012). Companies may in due course back out of offshore outsourcing, only because of bad public relations. For example, the companies like GM US try to maintain their public relation by creating employment for their own citizens, and for this, the company uses special word, i.e., repatriating to show the people of America that they are taking care of their employment and bringing jobs in their own country (Globaloutsourcingagency.com, 2017). Therefore, it becomes necessary for the companies to maintain the faith of their own people, which is not an easy task, but steps are taken to improve their market conditions. It is important for a business to have the best possible contract and laws abided. Laws are laws and anyone can sue to anyone, and it does not mean that an outsourced company that claims to take on responsibility cannot arise lawsuits conditions (Bucki, 2017). As nothing is full proof in outsourcing business practices and companies have to be very careful in this regard. There are many jobs and people become unemployed and lost their jobs due to outsourcing type of business practices. Developed countries outsource their business to another country, but the rate of unemployment increases in the parent company locations. This is the biggest disadvantage of this type of business practice (Bucki, 2017). In the United States economy, offshore outsourcing is the main concern and highly debated because of the unemployment in the US. If a customer call centre is outsourced to a country that has a different language, there may be problems relating to customer satisfaction, dealing with different language create many problems to run a successful call centre (Cui, 2016). Organized labour in the developed countries has very strong feeling about outsourcing to other countries that have a less standard of living and have worse working conditions (Cui, 2016). This type of opinion can impact the adverse effect that how the workforce responds to outsourcing and can affect the daily productivity of an organization. Therefore, there are so many reasons that a company should not want to outsource there can be a legal hurdles and bad public relations due to outsourcing whether onshore or offshore business functions (Lacity and Rottman, 2008). Many economists believe that the disadvantages outweigh the advantages and this type of business practice must not be considered. Many businesses do not like how it impacts their customer service. Recommendation After the study of the various advantages and disadvantages of outsourcing business functions, a professional opinion has been made. Every business has its own features and there is the large-scale business also that required highly skilled and talented people for their business operations. Sometimes it becomes the special requirements that the company has to outsource their functions to another person or to another country. There must be a balance between the outsourcing business functional and do with their own local people (Lisle, 2003). The business that is easily operated with local employment must stop offshore outsourcing and also decrease onshore outsourcing and if expertise is not in high priorities, the business should take the opportunities to operate and learn it themselves in order to avoid unusual outsourcing. When observing for outsourcing prospects in business, an organization must pay attention to potential zones and important elements within the area to determine if the whole functions or a part of the business function should be outsourced. References Alexander, K. (2012). Why auditors and public companies need international regulation.Amicus Curiae, 2002(42). Bucki, j. (2017).Compelling Reasons Outsourcing Is Wrong for Your Company. [online] The Balance. Available at: https://www.thebalance.com/top-6-outsourcing-disadvantages-2533780 [Accessed 27 Apr. 2017]. Cui, Z. (2016). The Impact of Switching Costs on the Outsourcing of Knowledge-Intensive Business Processes.Decision Sciences, 48(1), pp.71-107. Duck, T. (2006). Why outsource the compliance function?.Journal of Investment Compliance, 7(3), pp.67-69. Fariborzi, E. (2012). E-mail Marketing: Advantages, Disadvantages andImproving Techniques.International Journal of e-Education, e-Business, e-Management and e-Learning. Glaister, A. (2013). HR outsourcing: the impact on HR role, competency development and relationships.Human Resource Management Journal, 24(2), pp.211-226. Globaloutsourcingagency.com. (2017).Advantages and Disadvantages of Outsourcing. [online] Available at: https://www.globaloutsourcingagency.com/adv.html [Accessed 27 Apr. 2017]. Khan, A. (2012). Offshore Software Development Outsourcing Contract from Vendors Perspective: A Systematic Literature Review Protocol.IOSR Journal of Computer Engineering, 2(4), pp.26-37. Lacity, M. and Rottman, J. (2008). The Impact of Outsourcing on Client Project Managers.Computer, 41(1), pp.100-102. Lisle, C. (2003). Outsource a Core Competency?.The Journal of Private Equity, 7(1), pp.72-75. Patricia, P. (2017).Advantages and Disadvantages of Outsourcing. [online] Smart Church Management. Available at: https://smartchurchmanagement.com/advantages-and-disadvantages-of-outsourcing/ [Accessed 27 Apr. 2017]. Pope, J., Key, K. and Saigal, A. (2015). Nonprofit Outsourcing Patterns: Why Dont Small NPOs Outsource More?.Journal of Nonprofit Public Sector Marketing, 27(1), pp.99-116.