Offshore Outsourcing Essay

1447 Words6 Pages
Outsourcing is simply the farming-out of services to a third party. Offshore outsourcing is majorly used in IT related task for which internet plays a vital role along with work related to sales & marketing, finance, human resource & administration, etc. Quality and effective risk management are two integral parts of offshore outsourcing services. Offshore outsourcing allows businesses to reduce costs, gain staffing flexibility and increase revenue, gain competitive advantage, decrease cycle time, increase shareholder value, improve customer loyalty and ultimately allows a business to focus on its core competencies. An example of offshore outsourcing is the very well known clothing based company called Gap Inc. which outsources its…show more content…
Furthermore, the company achieves better standardized processes. Outsourcing is not always driven by cost reduction; there are also other considerations to outsource such as better quality or access to technological capabilities which are unavailable internally. There is a risk associated of misuse of the firm’s intellectual properties by the external company. There can also be trouble in coordination due to the distance between the firms. Other reasons for lack of coordination can be due to difference of ideologies, mindsets and working patterns. A company’s unique selling point can be based on specific knowledge and certain competences which provide competitive advantages and high return on investments to the firm. By outsourcing these firms provide specific competences to an external provider who is relatively unknown, through which competitiveness can be at stake copied. What if the supplier takes advantages from it by copying? This was studied in the case of Louis Vuitton whose products were copied by China & India & sold at other countries at a relatively cheaper price. EMERGING MARKET COMPANIES: Emerging market companies like Reliance, Hyundai Motor, Ranbaxy Infosys, Samsung, Lenovo undertake a variety of outsourced work for western companies. These companies can develop in a broader horizon by using the assets & having an access to technology of the western companies. Companies like Infosys, Tata Consultancy
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