Outsourcing Advantages And Disadvantages Analysis

Naturally, when there are great gains to be had, there are great risks. A lack of understanding in cultural protocol is a commonly occurring pitfall for foreign, new to market business endeavors. Also, even positives such as China’s size, can commonly be a double edge sword. It is imperative for companies considering international expansion to create a solid entry to market strategy, which evaluates if the firm has any potential in achieve gains in a foreign marketplace.

Outsourcing is the practice of hiring an external organization to perform some business functions in a country other than the one where the products or services are actually developed or manufactured. Today, 73 % of Fortune 2000 Companies says “ offshoring is an important part of their overall growth strategy.” According to the 2005 Duke University CIBER/

Management has many different tasks to complete and has to check over all different aspects of their company to ensure effectiveness. When a company is unable to outsource, management has to spend extra time

Outsourcing will increasingly be used to stimulate the creation of value and innovation in organizations. Enterprises will use outsourcing as a tool to consistently position themselves at the forefront of their industries, turning to the best talents, resources and opportunities, and sometimes using outsourcing to access new markets.

Outsourcing refers to hiring an outside, independent firm to perform a business function that internal employees might otherwise perform. Many organizations outsource jobs to specialized service companies, which frequently operate abroad. The outsourcing trend stands to continue; the latest wave of outsourcing impacts the information technology field. IT outsourcing includes data center operations, desktop and help desk support, software development, e-commerce outsourcing, software applications services, network operations and disaster recovery.2

The first advantage that you can get is skill expertise. on skill expertise organization might need to outsource a task when it required. This skill set may not be a corer competency of its business. To focus in their mission in furnishing a top notch item and service to the client what bodes well is off shoring the task to individuals can perform better. The organization not just use less on worker training and recovery valuable man-hours however cut the cost as well. The competitive advantage by outsourcing is an exceptional chance to other organization to serve in their

Transfer some of what are traditional internal activities and resources of a firm to outside vendors, making it slightly different than the traditional make-or-buy decision. Outsourcing is part of the continuing trend toward utilizing the efficiency that comes with the specialization. The vendor performing the outsourced service is an expert in that particular specialty, and the outsourcing firm can focus on its critical success factors – its core competencies.

Another reason for outsourcing is where a company wishes to expand; outsourcing is more economical in building foundations in foreign countries. A company that outsources achieves speed and quality products and services. An organization that outsources also earns a competitive edge through establishment of strategic relationships with high standards service providers. This helps an organization to be able to satisfy its customers fully. Having outsourced, training costs will be avoided where the contracted third party will concentrate on training issues. Risk management is also another advantage for relying on a third party since the company risks will be

International marketing is crucial in learning a new culture. If our company go for international marketing then the company will experience and learn the culture of that country which may cost us. Because we may produce some products which may fail but this will help us in long run to go for another market of same nature in a very cost effective way. The experience of our company in dealing with a new culture will increase. (Anon, 1978)

It is important to understand the implications of comparative and competitive advantage in outsourcing. Comparative advantage theory explains that it may be beneficial for two parties (countries, regions, individuals and so on) to trade if one has a lower relative cost of producing some good. It takes into account the opportunity cost instead of the absolute cost of production of one good to evaluate the sourcing strategies that are beneficial for both parties.

Outsourcing can be defined as a business relationship in which two or more companies work together to achieve a collective advantage. Rugman et al (2003)

Information and communication technologies are of paramount importance in the process of international outsourcing primarily through the technological advancement surge and demand in recent years. Through the rise of Information technology in recent years, the importance of international outsourcing rose significantly. Outsourcing is the contracting of the management and/or execution of a business function to an outside third-party contractor or subcontractor. Outsourcing typically refers to the contracting of services to an offshore, rather than domestic, company. While outsourcing has been an accepted business practice for

Outsourcing is very advantageous. In addition to reducing costs, it also helps firms and companies to improve the efficiency of business operations. The true line between business goals and deliverables in outsourcing. It also can increase productivity and efficiency. Outsourcing provider with expertise and experience can actually help streamline business processes and contribute to the line. Outsourcers can also benefit from third parties to improve the level of service consistently. This will improve the efficiency and can lead to customer satisfaction and lead the company better prepared for the challenges of specialized market.

The outsourcing is when businesses need expertise or skills that they don't have within their organization, they often turn to outsourcing to solve their problems.

It is an evident fact that outsourcing is quite prevalent practice among both public and private organizations. It has been considered as one of the prime elements of any business strategy. It is with the aid of outsourcing that organizations attempt to reduce the overall cost of sustenance and augment organizational productivity in comprehensive terms. The activity of outsourcing enables the organization to render higher level of emphasis on core activities of business. In the past thirty years, various researchers have undertaken researches to support outsourcing as a mechanism for bringing down organizational costs in a substantial manner. But the comprehensive impact of outsourcing remains to be seen. This research work will assess the relevance and significance of outsourcing in reference to the process of new product development.