Do the Benefits Outweight the Failures of Outsourcing Essay

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Though outsourcing offers many potential benefits for product development as it may be used to speed up processes and reduce staffing costs; these benefits are speculated and not always certain. As a result, organizations must not overlook the possibilities of failure due to outsourcing. Because of the inherent nature of outsourcing, vital jobs are extremely distant from central headquarters, and control is essentially being shared and sometimes completely transferred to a third party (Rozet, 2009). Some innovation risks associated with outsourcing product development include loss of confidentiality, possible losses of technological core competencies, loss of managerial control, loss of control of outsourced activities, and hidden costs …show more content…

For pharmaceutical companies this may include a “range of scientific, medical, regulatory, and commercial disciplines (Lowman & Trott, 2013).” Furthermore, communication of goals, strategies and tactics can be challenging to translate between distinctive business cultures. The concept of cross-communication is very important because in addition to outgoing communication from the organization, the third party must have the capacity to absorb and manage the new knowledge. Cultural measures like “power distance, individualism, uncertainty avoidance, long-term orientation and masculinity,” learning culture, motivation, and creative climate must be researched and understood so that they don’t become cultural barriers and they could pose unique management challenges (Robert, 2014). Culture also plays a role in choosing to outsource because firms must leverage the talent in the emerging markets in order to choose which aspect(s) of the idea generation process they need to outsource. From manufacturing to production to distribution, firms can leverage the outsourced according to their innovation potential as well as willingness to acclimate to the firm (Gobble, 2013). Acclimation may range from those who prefer to “operate within strict parameters to those who value operational autonomy in order to

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