Advantages Of Outsourcing

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Outsourcing is a practice in which an individual or company performs tasks, provides services or manufactures products for another company. The term itself is often referred to as offshore outsourcing, for the purpose of this essay we will like to talk about the export of labor and manufacturing by Apple Inc, Nike and Walmart to companies outside of the United States. Outsourcing has three main advantages, let us talk about a few of the reasons why a company will decide to outsource verses insource.

The greater economies of scale will be a factor a company will consider when deciding whether or not to outsource; the ability to mass produce, to lower the initial fixed costs per unit, by spreading the cost out over a larger number of units. This economy of scale can be achieved by a third party that is able to pool the needs of a large number of firms, therefore making it cheaper for that third party to produce specialized goods and services. Also the ability of a specialist outsourcing firm to keep up-to-date of the latest developments in its field, this is very significant in the field of technology. Lastly, outsourcing enables small firms to do things for which they cannot hire full-time employees for. These will apply to the
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In the early years of the company’s expansion Sam Walton decided to reach across the Pacific and make imports a pillar of Wal-Mart's business model. This model forced his American suppliers to cut down costs, stressing sales volume over high margins, and wowing customers by showcasing one super low-priced item. According to the Economic Policy Institute, Walmart’s imports helped to destroy 200,000 U.S. manufacturing jobs alone, while the total number of job losses due to Walmart’s outsourcing is believed to be 541,000 as last recorded in 2013. In fact, from year 2001-2013 that is a difference of 415,000 plus jobs. (Scott) The conditions are only getting worse for the
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