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Outsourcing
Outsourcing
Outsourcing is defined as "the process of purchasing goods and services from outside vendors rather than producing the same goods or providing the same services within the organization.” Outsourcing does not come without risks, but it also has its benefits as well. Gaining services or products from outside sources can be very beneficial, considering the alternative that the firm will have to produce the products themselves. However, one main risk is that when a firm does outsource, they leave the supply of that product or service in the hands of someone they cannot control, contrary to controlling their own supply. Ethical issues are at hand here, as well as trust issues. As you will see in this paper, many different opinions about outsourcing are present among different financial investors and financial officers. Management teams and management leaders are the head personnel that weigh the pro’s and con’s of outsourcing, and this paper will briefly summarize the various opinions, pro's, con's, large benefits, and ethical issues dealing with outsourcing.
Answering Kirkegaard’s question about if America is losing all of these white-collar jobs, would we still be able to prosper? I do not believe we as Americans would be able to prosper because we are losing a lot of our jobs overseas. Therefore, since overseas they are doing the job for less money, there is no way that America would be able to prosper. America can’t grow if more and more people are getting laid off due to jobs going overseas. But, since more jobs have been going overseas small businesses have become more popular because those jobs won’t leave America.
Outsourcing ultimately will result in a higher profitability for the business which will then put more money into the economy. But, with the company that is outsourcing, they are then going to have a higher unemployment rating because the people doing the job are from a different country. Decide what's important. For instance, if a function is not strategic to your business, and there is a need for payroll services or health insurance in a recruiting agency with only ten employees, consider outsourcing it to an expert provider.
Don't go halfway. Don't settle for half-hearted measures or intermediaries who manage only some aspects of your business when the more efficient solution is to outsource the entire process. For example, if the telemarketing employees of a credit collection company only make calls on your behalf but do not follow up with any necessary customer visits, the collection function may be incomplete. Beware of regulations. Make sure your outsourcing partner understands and complies with all the rules and regulations governing your industry and the workplace.
This popularity is not just among small or medium sized businesses. Large corporations are using outsourcing in many different areas of their business. IT employment has been declining heavily during the years of 2000-2002 due to the fact that a net of almost 75,000 foreign computer-related workers stopped working (Kirkegaard). An example of two computer-based companies that used outsourcing is IBM and Compaq, both of which helped solve their storage problems. Models of this outsourcing vary, and even with these two computer companies, the same is true. However, IBM and Compaq are offering distinctly different models. Compaq rents storage hardware and software that are kept on the customers' premises. The service is tailored to IT managers who worry about giving up control of their storage.

This caution that is being referred to suggests that outsourcing should be approached with some caution. If you find that something can be done a great deal cheaper, then why spend more money to have the same job accomplished? Consider your methods anew. The law insists on redundancy payments for the people doing the job. If a fraction of that cost was invested in new methods, costs might fall out of the business.
Regardless of these warnings, businesses almost have to outsource in order to turn a profit. Most believe, and rightly so, that to make every piece of their product is not just impossible, but unfathomable. Imagine the cellular phone. Verizon Inc. would have to manufacture their own plastic, circuit boards, chips, fluorescent lighting, speakers, and microphones. They would then have to build the manufacturing plant to assemble them, then finally do what they do best, which is advertising, and get their product out on the market. This is ludicrous and most businesses that need outsourcing know this. As I have mentioned, IT outsourcing has been the newest "fad." Not only is it just new, but it is becoming more and more valuable. "A number of factors have contributed to the solid growth in IT outsourcing in recent years: year 2000 preparations, E-business opportunities via the Internet, the IT worker shortage, and the rapid pace of technology change. During the years of 2000 to 2002 the overall employment declined by 2.2 million or 1.71%.” That information shows that outsourcing is threatening just about everyone with their job. The reason why employment dropped that much is because of outsourcing to a third party.
Moving from one end of the spectrum to another, there are a lot of different advantages for businesses that outsource. For instance, it can help with cost. In all actuality the main goal for every business is to spend as little as possible and maximize their profits. Outsourcing in a business can ultimately lower their costs because they will spend less money on having someone else in another country to get the job done in their house. However, if an employee is at the actual job the company would have to pay him/her more money. Also, another big plus with outsourcing is that it can give the company more access to people who specialize in a certain skill. A third party would be an expert at the specific service they would be providing. By outsourcing to such a service provider, the business gets access to a specialized skill, which may be useful in some other field for the business. Large savings are in store for many companies who choose to invest in outsourcing their data, services, or products. It's obvious why storage and backup outsourcing are gaining momentum. You pay only for the data storage you use per month and you'll choose between two basic types of storage service provider: public or private utilities.
In a public setup the hardware containing your files might exist at the provider's site, in an Internet collocation center (often used for Web hosting), or at an ISP. In a private setup the hardware and software reside at your business. According to InformationWeek, "Outsourcers can be a viable alternative for companies that want to roll out new initiatives quickly and effectively. Such partnerships make IT initiatives possible without having to hire more talent or invest heavily in revamping or building infrastructure. The existence of service-level agreements can make even the possibility of failure easier to bear. Yet despite such opportunities, some companies still resist entrusting elements of their IT operations to outsiders."
Data outsourcing is not always the best choice, however. With outsourcing there are linguistic barriers, which are when a function that needs handling of calls is outsourced to a foreign location and the first language of that nation is different from the nation which outsources the function. It may then end up leading to low quality call handling. This is a concern that is evidently higher in call center functions that are off shored. Then there are people that find the linguistic features such as accent, work use, and phrases that might be very different and not understandable. Also with outsourcing it can cause social responsibility, which is when they are resort to off shoring, which is outsourcing of a process to a foreign location, it results in reduction of employment avenues in the nation from where the function is outsourced. This goes against the social behavior of the business outsourcing the process.
Because of the inherent risks in outsourcing and the rule of thumb, "high risk, high return," outsourcing has its warnings and its obvious monetary benefits. As we have seen and reported, IT outsourcing seems to be at the top of the market. The demand is high and the supply is low, which tell IT specialists where to go. The outsourcing model has been in the transition and reforming stage the past few years and is now becoming a highly technological asset. Experts in outsource management are the personnel that are being called on to direct the flow of money to maximize productivity and profit share.
Not only do outsourcers thrive on well-managed businesses, we have also shown that small to medium-sized businesses are realizing that outside help in production and/or service can be profitable. "As U.S. owners of wireless data devices start forming a critical mass, businesses are beginning to offer their customers basic services tailored for wireless access. While a number of these customer-oriented applications have appeared in recent months, most businesses offering them are hedging their bets by limiting the number of devices supported or the types of services offered. A wireless customer may be able to check a stock quote, but not make a trade; check a bank-account balance, but only if the bank branch offers the feature; or see flight information, but not change a flight," (Turek, 2). This is just one example of the cutting-edge wireless companies that are using outsourcing in a major way to maximize profits. Companies such as Verizon, IBM, and Microsoft Corporation have used outsourcing in a big way to finance many different projects and bring them to the point in which they are today.
There are both pro’s and con’s when it comes to outsourcing. I believe that it all depends on the type of company and what would work best for the company. You may have to give it a try, and if you don’t like how it is turning out, you can just stop.

Worked Cited
Kirkegaard, Jacob F. "Offshoring, Outsourcing, and Production Relocation—Labor-Market Effects in the OECD Countries and Developing Asia." Apr. 2007. Web. 20 Apr. 2010. .
Kirkegaard, Jacob F. "Outsourcing—Stains on the White Collar?" 2004. Web. 20 Apr. 2010. .
Swanson, Sandra, and Elisabeth Goodridge. "Who's In Charge Of IT." Information Week. 16 Oct. 2000. Web. 15 Apr. 2010. .
Turek, Norbert. "Companies Turn To Outsourcing For Wireless Services." Information Week. 30 Oct. 2000. Web. 17 Apr. 2010. .
Weidenbaum, Murray L. "Outsourcing: Pros and Cons." 1 Aug. 2004. Web. 21 Apr. 2010. .

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