A Short Period Of Declining Demand

1062 Words Oct 31st, 2015 5 Pages
Following the 2008 recession and a short period of declining demand, the outlook for outsourcing and off-shoring showed an increasing trend for the foreseeable future. As companies realign their strategies to better compete in the world stage, the projections indicate that this practice will grow over different dimensions including function, services and geographic locations (Deloitte, 2014).

The main benefit for the companies that use outsourcing and off- shoring is the positive impact it has on their bottom line. Companies usually outsource services or functions to undeveloped regions of the world where wages are much lower and regulations are weak allowing them to realize savings and lower costs, which are probably unattainable if carried out in their home countries. The ability to offload secondary functions or competencies to third parties allows companies to concentrate in their core processes and maintain or create a competitive advantage. Other benefits include getting access to skills and capabilities not available in-house, more operating flexibility and the ability to lower operating risks by delegating activities to third parties (Dinu, 2015).
The above are some benefits cited by firms regarding outsourcing, but as it is common with all activities there are negative side effects. The increase in investment risks, including operating and more importantly reputational risk. Poor selection of vendors, lower quality standards and security gaps for confidentiality…
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