Assess The Difference Between Outsourcing And Offshoring

Because many businesses in the US have more often began outsourcing different business products instead of doing them in-house, it is important to understand why outsourcing may be the best option. Although many tie outsourcing to foreign markets, outsourcing can include both foreign and domestic markets. By entering into a contractual agreement, outsourcing allows organizations to pay for services they need. This gives the option for a business to get professionals to perform services for them that the business may not have the staff for. Outsourcing provides a cost saving-strategy that is usually more affordable. Ultimately,

In general, the outsourcing is hiring the foreign workers/company to do a particular task, as opposed to hiring domestic workers/company. Besides the outsourcing, the international purchase is an essential activity of companies. In the trend of a booming global economy, a company only focuses on its core value and hire suppliers to supply the necessary product and service. The relationship between companies are complicated and interdependent.

The U.S. economy has seen many hardships within the last decade. The economy has suffered from a recession that is still threatening to cripple some Americans and unemployment has been at an all time high. People have lost homes and jobs and many businesses have gone bankrupt simply trying to survive. However, in the midst of this economic crisis some companies have managed to survive. Many companies, approximately 36% of them, have found a way to avoid economic collapse by cutting costs (Job Outsourcing Statistics, 2014). One of the most popular cost reducing strategies of our time is called outsourcing.

It is a concept that has evolved from a manufacturing perspective to a strategic perspective, which views the concept as a way for organizations to focus and be more competitive. The basic premise of outsourcing is that a specialist organization can perform a particular service more efficiently than can internal operations because a specialist organization has an inherent advantage in producing and delivering a service. Superior technology, management skills, or economies of scale may contribute to this perception. The type of sourcing relationship depends on whether a long-term or short-term need exists. To save funds used for benefits for regular employees, temporary workers are hired. In this case, the organization (outsourcer) provides all necessary resources except the workers, who are provided by the vendor. For long-term services, the vendor has full responsibility for delivering the service; the outsourcer provides only a liaison.

“Outsourcing refers to the practice of contracting workers outside of a company or business for work duties or services previously performed by company employees or “in-house”. This practice is also often referred to as offshoring due to the increasingly prevalent use of “non-U.S.” service providers for these outsourced duties. However, strictly speaking, outsourcing can and does refer to the use of contracted labor provided by individuals outside of an organization, but still within the U.S.; whereas when these same services are provided outside the U.S., it is both outsourcing and offshoring.”

The dawn of the outsourcing era. Many large U.S. corporations cultivates outsourcing faster than we can imagine. The trend that began in the late 1970 and picked up speed in the 1900s with the opening trade with China, India, and Eastern Europe (“Outsourcing: What’s the true Impact”). In its broadest sense, outsourcing is simply contracting out functions that had been done in-house—a longtime U.S. practice (“Globalization: Threat or Opportunity”). Subsequently, outsourcing is an essential part of globalization; and it is the combination of markets through the cooperation of internalization, federal, and state governments with corporate companies to produce products on a reduce production cost, and offer services on lower labor cost. When a U.S. manufacture product, and buys material from an intermediate supplier from out of the country rather than producing them in-house, that is what is called outsourcing. Also, when U.S. corporation hires outside contractor out-of-the-country to do U.S. call center services for less labor cost that is outsourcing. When a company deals out its operational task, such as payroll, accounting, and software operations that is outsourcing. Obviously, all of these examples seem to benefit and in favor of the corporations. To get the clear understanding of outsourcing for major corporation perspective, I have interviewed IKEA’s U.S. Deputy Retail Country Manager Rob Olson about outsourcing—Swedish

In today’s society, outsourcing has become a very critical and controversial issue to companies and other countries. Outsourcing is known as offshoring as an organization’s use of an outside organization for a broad set of services. As technology continues to grow and advance more, outsourcing becomes more popular. Many American white collar jobs are being taken over by foreign countries around the world. Almost every occupation or career in the United States has some effect of the outsourcing. As a result, many Americans become unemployed and financially challenged; being that outsourcing can increase the United States unemployment rate. Employees who live in the US rather keep jobs in the country to create more opportunities. On the other hand, few stakeholders

Offshoring is one of the reasons behind the recent unemployment hikes. Roughly 3 million jobs were offshored in 2015 alone (“Number of U.S jobs moving offshore”). Simply put, offshoring is when a company decides to purchase products or services from a third party; usually

Job outsourcing is the shifting of a business from one country to another. Companies may choose to outsource or offshore for a number of reasons, perhaps they are trying to save money on taxes or increase productivity in the company.

Over the past decade, many companies from North America have moved to foreign countries. This migration is known by many names – “runaway plants”, “outsourcing”, “global sourcing” and “offshoring” ("Outsourcing: What's the true impact? Counting jobs is only part of the answer."). According to Investopedia, outsourcing is “a practice used by different companies to reduce costs by transferring portions of work to outside suppliers rather than completing it internally” ("Outsourcing Definition | Investopedia"). Companies outsource primarily to cut cost. This mostly helps them to reduce their cost by 60 percent since labour in many Asian countries like China and India is very cheap. Even though offshoring is benefiting companies, it has negative

Once a clear set of instructions can be created for a job which allows quality to be easily and rigorously monitored, lower cost labor can be taught how to perform that job function. These lower cost options may include computer automation, robots, or low cost labor in foreign countries. This makes many forms of procedural based jobs good candidates for outsourcing. Specialization has allowed “personal outsourcing” in which a whole department is not outsourced, but just the specific tasks that could be classified as tedious or time-consuming and may provide a better benefit if the person who is meant to work on the task focuses on other higher-valued activities, while the outsourced contractor takes responsibility over the lower-value given task. This paves way for levels in efficiency and effectiveness because though it might be more cost efficient to keep just the one employee, but it might not be effective if the employee cannot meet posted deadlines due to the time needed to complete

· Choose the right location: The type of work being outsourced will influence the location. India has gained a reputation for software development. Between 2003 and 2004 it has seen over a 30% growth in software and IT service exports, and by the year ending in March, 2004, Indian companies have earned $12.5 billion in technology exports. But India is not the only source of reliable but inexpensive labor. Countries such as China, the Philippines, Romania, Argentina, and even Ghana and Ireland are all centers for offshore operations of various

In an article for the Washington Post, Steven Pearlstein (2012) explains how outsourcing and offshoring has been a part of American History since the late 1800s. Today, well known organizations like Nike, Apple and UPS are known for being a major part of the outsourcing trend. Pearlstein (2012) suggests that the catalyst for offshoring began in the in the late 1970s as the U.S. firms were forced to find cheaper, yet efficient ways to conduct business as foreign competitors had an immediate advantage. Since the wave of outsourcing and offshoring, it appears that while big businesses have been able to cut costs and increase profits and revenues, the United States economy has suffered as jobs are taken away from citizens. Katherine Peralta (2014)

“Outsourcing refers to the contracting or subcontracting of noncore activities to free up cash, personnel, time, and facilities for activities in which a company holds competitive advantage”(Barlow, 2012). Outsourcing contributes speed to the operations within a business, gives a business the freedom of choosing the best possible supplier applicable to their business and also requires less of an effort from the management sector. The majority of businesses outsource in order to get jobs done quicker and more efficiently [comma] which is solved by hiring a specialist instead of giving your particular business the training and skills necessary to tackle the job at hand. For example, Apple outsources thousands of manufacturing jobs to countries like China, Korea in order to save time and money.

However, the contracting of non-governmental workers allows agencies to adapt to the rapid changes in technology because many times contractors are certified and experienced knowledge workers and have the expertise to deploy the latest technical innovations (Chen and Soliman, 2002). For this reason the outsourcing of technical and complex tasks to contractors have become increasingly popular across both private and public organizations (Slaughter and Ang, 1996). Some of the emerging trends in outsourcing includes domestic verses offshore outsourcing. Domestic outsourcing is a perception of the local jobs in a country which is best for the local economy. It has rural outsourcing which makes rural parts carry out functions in a competitive basis rate as compared to other service providers from other countries. Offshore outsourcing is as a result of its spread to many countries and is brought forth by change in prices. Another trend is security issues whose major concern is the security questions on the sensitiveness of information that is accessed by outsiders of the firm. It has been a key concern and still remains as there have been reports of fraud and theft of assets which is a limiting factor to the growth of outsourcing locally and internationally.