Outsourcing
Articles >> Effects of Outsourcing
The Outsourcing market is estimated to grow tremendously in
the coming few years with an increasing number of companies planning to
outsource both low-end and high-end jobs to offshore destinations. Also
the number of companies providing outsourcing services is on the rise,
thus resulting in larger variety. Due to the fact that more and more
companies are outsourcing, the risks are getting smaller as businesses
have more experience and clearer objectives.
Outsourcing in
the world today is seen as a strategic management option rather than
just a cost cutting operation. It aids companies to achieve their
business objectives through operational excellence and a better market
position. In order for companies to focus on their core competencies,
all companies today outsource one or more of their operations. In order
to compete in the global economy companies need to focus their resources
on their core operations.
Lately however, the concept of
outsourcing has been criticized. The negative attitudes toward offshore
outsourcing have been mostly discussed by parties in the US and UK, due
to job losses in the mentioned countries. Some people in countries like
the US, feel that outsourcing is threat to their economy. Outsourcing
jobs to offshore destinations, is causing unemployment in the minds of
some people.
On the other hand not only does outsourcing have
benefits for the company it also has positive implications or effects on
a larger level. Outsourcing will ensure that companies can pass the
reduced costs to national consumers or for investors to reinvest. New
revenues will be created as outsourcing to a foreign country will
establish demand for the company’s national products, especially in
high-tech products. Although some national jobs may be lost in the
outsourcing process, other jobs will then be filled generating
additional value for the economy.
Both negative and positive
effects of outsourcing can be recognized. Positive effects of
outsourcing can include concentration on core business areas,
world-class technology at lower rates, skilled manpower at affordable
prices, increased productivity, competitive advantage and tax benefits.
Negative effects of outsourcing can be decreased
quality, increase in time-to-market, poorer customer service, hidden
costs, loss of control, unreliable vendors and negative long-term
effects on business.
