The Advantages and Disadvantages of Outsourcing

After analyzing all these risks and criteria Id like to present some points to demonstrate why we should go for outsourcing:

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,

(Ashe-Edmunds, 2016) (Mattern, 2007) These disadvantages negatively affect the U.S. economy by an increasing rate of job loss for blue-collar American workers, unfair wage competition, and quality products getting replaced by low quality consumer goods. Some negative social impacts of outsourcing include exploitation of labor and pollution.

While outsourcing may be beneficial to some of the companies partaking in it, the general consensus is that it ultimately proves to be harmful to the American workforce. The act of outsourcing and shifting many company call centers and technical support teams, or “low skill service jobs,” to foreign countries reduces jobs for those that could truly benefit from them within our own country. The unemployment rate has dramatically increased, and continues to rise, compared to what it has been in years past; yet there are numerous companies which still insist on handing over these “low skill service jobs” to people in other countries such as India. The most obvious and logical reason for outsourcing is reducing costs; people are working for

Outsourcing has become an integral part of many organizations today. Outsourcing has its advantages and disadvantages that organizations will have to weigh to decide whether or not outsourcing is the best possible solution to their current problems and business operations. Outsourcing refers to the process of hiring external provider to operate on a business or organization function (Venture Outsource, 2012). In this case, two organizations or businesses enter a contract where there will be an exchange of services and payments. This paper will discuss the possible risks an organization may encounter in outsourcing in relation to the use of an external service

Outsourcing is a method used by many corporations in which their products are manufactured in foreign countries often for cheaper labor.This method method of productions has it’s pros and cons.

Outsourcing can be a means to perform the core functions of an organization effectively by having more time focused on the activities critical to the delivery of services to customer. The non-core activities are performed by the leaders in that area which will help to achieve better efficiencies. Outsourcing can substantially lower costs, help to access better technology and use innovative ideas etc.(Robert,2001). The advantages of outsourcing are: Cost savings:

As described in the article, “Outsourcing - Pros And Cons” by Kristin Carpenter; “Outsourcing is basically the practice of one company to contract another company to provide the services that could have been performed by their own staff…. One of the main reasons why companies are into outsourcing is diminished company resources, both in financial terms and in manpower costs” (Carpenter). Because the most powerful American corporations in the U.S are no longer producing their merchandise in the U.S but in developing nations, in order to reduce the cost of labor and increase productivity, the United States no longer has companies that produce jobs in America. And due to the gradual growth of the use of outsourcing, American employment opportunity has decline greatly, leaving many people unemployed and harming our economic strength in the world.

Let’s talk about a positive aspect of outsourcing business. “Contractual Obligation: The liability of a service provider is higher than that of an in-house employee. This makes working with them a safer bet for businesses.” At least you can be at ease that the people you are working with overseas are well trained in the business that you are outsourcing.

Outsourcing overseas is a major disadvantage to the American economy. Contrary to popular belief, companies argue that low- cost labor will in turn save them money and raise competitiveness, which will result in less costly products. When taken into consideration outsourcing eliminates domestic jobs. When a firm outsources, the jobs outsourced are, by definition, removed from the country. These jobs are then sent overseas, where labor is paid far less than in the United States:

The number one goal for any company is to be profitable. They must first create a product that is in demand. After this product is created, other concerns will start to arise such as manufacturing, distribution, overhead, competition and marketing just to name a few. All of these things lead down to one thing, money. In order to save money, businesses will look into many options. One of these is to outsource jobs to foreign countries. Outsourcing jobs can save businesses tremendous amounts of money but can ultimately hurt the economy here in America.

In analyzing the second reason listed for why outsourcing is used; ‘inability to attract the highest caliber of employees to job functions that may be peripheral to the organization’s core discipline’, companies employ a different kind of outsourcing tactic. This reason leads to offshore outsourcing solutions. If a company cannot attract high caliber domestic employees to job functions secondary to their main function then they seek help where labor may be less expensive and more efficient.

In this paper the negatives and positives of offshoring are discussed. Offshoring has become a way of life for many businesses. It is widely accepted that offshoring is a strategic business decision. Many organizations are taking advantage of these opportunities because of the benefits to them and their customers. In order to compete with other companies many businesses are finding it necessary to outsource to other countries. Offshoring has produced some economic benefits but it has also created problems such as, work performed in remote areas that fail to meet quality standards, exploitation of workers, and lower environmental standards, especially in developing countries. These standards may damage the local environment or pose health

So why do business even need outsourcing if they can do the jobs themselves one might ask. The answers it’s cheaper and more efficient. It is simple it costs less to bring in these outside companies or workers to complete a task for much cheaper then the company would have to pay it’s in-house workers. Another reason why outsourcing has also become so popular a business might not be able to do a certain task it’s buyer wants. This is where outsourcing can play a factor as well. No business is completely perfect assistance and partnerships are key to being a successful company. Outsourcing allows companies to go out get the help they desire, then continue to perform in the manner in which they have been before.

There are also several disadvantages to outsourcing agreements, which include becoming dependent on an outside supplier for services, failing to realize the purported cost savings from outsourcing, locking into a negative relationship, losing control over critical functions, and lowering the morale of permanent employees.