Which Determinants Influence Foreign Investor's Offshore Outsourcing Decision In Bangladesh Case Study

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.

* Labor outsourcing is a good strategy to decrease the labor cost. But it associates with many issues. Once outsourcing is done, the MNC cannot just stay behind. The MNC should carefully supervise on the working conditions, safety, wages, working hours, gender discrimination and human rights violations. If any of these factors going wrong and leads to sweatshop conditions, it directly affect on the reputation of the MNC. If once the name or the brand is blacklisted, it is very hard to repair the damage. Therefore, the risk of outsourcing is high.

* Aside from maximizing profits, list the key factors that managers should consider when deciding whether or not to outsource offshore. Determine the key factors that you believe to be the most influential. Provide a rationale for your response.

Ferreira, J., & Prokopets, L. (2009). Does offshoring still make sense? Supply Chain Management Review, 13(1), 20-n/a., pp 1-5, Retrieved from http://search.proquest.com/docview/221135949?accountid=12085

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.

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

Outsourcing is a business tactic that consists of moving production of a product to either a sub-tier vendor or moving operations away from the company’s home country in order to eliminate costs. Recently, the most common way of outsourcing is to purchase property in underdeveloped countries and build production facilities there. The cost savings comes from cheap land for factories, cheaper production labor, and cost savings due to lesser taxes and regulations. Unfortunately, with these benefits, many exterior factors are resulted.

In light of recent growth of domestic and foreign countries outsourcing and off shoring over seas, companies been taken advantage of the cheap labor cost for outsourcing and off shoring manufacturing. Competitive business investing in domestic and foreign manufacturing have affects every part of the business industries from design, software development, finances and logistic management, i.e., customer and sales. Nevertheless, outsourcing been praised by businesses for outcomes of cost-effectiveness, efficient, productive and strategic, but damned as malicious, because of companies’ greediness, detrimental, and brutal in the public eyes.

· 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

This strategic report of ANZ’s offshoring strategy examines the effectiveness and drivers of ANZ’s decision to move towards outsourcing internationally, analyses the impact of ANZ’s offshore programs on stakeholders, explores key risks and opportunities and evaluates the success of ANZ’s offshore system.

In terms of business, outsourcing can be defined as the process of assigning company’s business processes to external agencies in order to develop the firm’s performance and to avoid business’s high expenses. These expenses may include energy costs, production and labour costs, high taxes and excessive government regulation. From strategic management point of view, outsourcing is used to reduce the operational costs so that the organisation can focus more on the core business and gain competitive advantage. The outsourcing principle was fundamentally applied by PRCM in order to fund the mine design and operation processes. This sort of strategy had large impacts on the company’s performance hence, the next paragraphs will highlight some of these influences.

In the past decade the topic of outsourcing has become a heavily debated subject on if it is ethically correct to outsourcing jobs to foreign countries. Outsourcing has become more and more an option for many companies and not just an economic fad. The decision to outsource is a difficult one for any company to make because there are many advantages and disadvantages to consider. The decision to outsource affects many people, communities, and industries so if a corporation decides to outsource they must consider how it will affect human dignity, the common good of the economy, and subsidiary.

Because of the important relationship between insourcing/outsourcing and competitiveness, organizations must consider many variables when considering an insourcing/outsourcing decision. This may include a detailed examination of a firm’s competency and costs, along with quality, delivery, technology, responsiveness, and continuous improvement requirements. Because of

A final reason for the company to offshore part of their operations is access new markets. Since the company is not restricted to just the domestic market, offshoring gives the company global presence and the ability to access developing markets in Third World countries. By streamlining the company’s production processes and supply chains globally, companies can lower their prices increase demand for their products, thereby attracting new customers and entering new markets.

Here researchers examined the selected countries like India, china, Brazil and Russia. He mainly found that there is continuous rise in outsourcing revenue for global sourcing, and he found that the BPO will overtake ITO within five years. The latest trend is multi-sourcing. They also found that India is still holding the clear lead as the preferred destination for outsourced services both BPO and IPO. The dollar value of the Chinese industry itself is twice that of India’s (Carmel et al, 2008). The captive centers are wholly owned by subsidiaries located in offshore location that that perform work for parent companies. The captive center use the strategies to change the way of offshore assets are utilized. One of the strategy used by captive center is pursuing a hybrid strategy here the captive outsource units of work to a local service provider. These captive centers still work for the parent companies but they outsource their work or insource the work. By doing these the captive centers can focus on the value adding services and their core services by doing these reduction in the cost can be done. There is also risk associated with these type strategy like non completion of contract, reduction in quality of service or goods