Introduction
This article will explain to every one what Outsourcing is and what it isn’t. I will go over all of the issues, advantages, disadvantages, benefits, and downfalls, so that people will know exactly what Outsourcing does. I want people to have all of the information at their fingertips to decide how they feel about Outsourcing. This is a very touchy subject and make people feel differently.
The Idea in a Nutshell
So what is Outsourcing? This is something that people are speculative about what the definition is because there are so many different definitions. However, outsourcing is often viewed as involving the contracting out of a business function – commonly one previously performed in-house – to an external provider. That is how Wikipedia feels about the definition of Outsourcing. So this article will explain to you why firms choose to outsource for their business and if it is the beneficial for everyone or the right way to go.
The Top 10 Things You Need to Know About Outsourcing
1. Companies outsource various jobs like call center, email, and payroll services. There are many reasons that these companies outsource those jobs, but the most prominent reason is that it saves firms money. Many companies that offer outsourcing services are able to do the work for less money. This is because they do not have to provide benefits to those workers or overhead expenses to worry about.
2. Outsourcing allows firms to focus on business issues at hand; leaving the details to be taken care of by outside experts. With less work for the management team they can focus on more important broader issues within the company. The work outsourced is often given to companies with newer technology that smaller companies couldn’t afford.
3. Outsourcing eliminates direct communication between a company and its clients. This prevents from building loyal and trust worthy relationships with their customers, and sometimes leads to dissatisfaction for one or both parties. This also makes it hard to control the part of the company that is outsourced. This may cause delayed communication. Any information is vulnerable, companies may become dependent upon it’s outsource providers, which could cause problems if the outsource provider backs out of their contract or shuts down suddenly.
4. The process of outsourcing has four stages:
1) Strategic thinking: Develop how the organization feels about outsourcing, and what their philosophy is about it.
2) Evaluation and selection: Decide on what projects are to be outsourced and where to outsource them too; location and provider wise
3) Contract development: Work out legalities, pricing, and service agreement terms.
4) Outsourcing management or governance: keep the relationship between the client and outsource service providers on tact.
5. Successful Outsourcing has three factors
1. Executives have to support in the organization of clientele
2. Communicate with the employees affected
3. Manage your service providers to be sure they are doing exactly what you need and pay them for.
6. Outsourcing is said to help the economy and affect it. This concept is a great debate. When you choose to outsource some of your jobs it will save money for your company and open up opportunities for higher level jobs in your company. At the same time when companies outsource less skilled jobs to foreign countries they are taking away jobs for lower income individuals, leaving them unemployed. Outsourcing can also decrease the corporation’s tax and lower federal spending. By this being said it is hard to determine if it is more beneficial or not.
7. Some people argue that by giving jobs to workers in less developed countries this improves them economically and increases trade for US products. It also increases the country’s ability to pay back the debts they owe to the US. It can also build better relationships between the US and that country. If those countries are more economically stable they can buy products from the US in turn creating more US jobs and lower the prices of products for US consumers.
8. There are many issues with Outsourcing that need to be addressed. Not all people in less developed countries economically benefit from outsourced jobs. Outsourced work may be performed by hazardous materials, in humane working conditions, and also by young children. They are paying these workers very low wages and no benefits and working the employee’s long and hard hours. Abusing the foreign employees might not benefit US Trade or relationships.
9. Outsourcing is a very difficult issue, but it is still in existence. Some corporations are outsourcing their business to evade taxes and deprive the government of needed money. Many suggest corporations should have an outsource tax and a reward for keeping jobs in the US. On the other hand people feel that the temporary loss of jobs will be followed by greater economic growth in the US and will be worth the cost in the long run.
10. Outsourcing has many barriers. Communication tends to be difficult when dealing with an outsourced job. If the job is outsourced far away it is hard to make sure you get the same level of quality. This is the price you have to pay when you have to manage many different areas in your business. Language barriers are also an issue. The barrier can provide problems when you try to negotiate and deal with the company who has taken the job. There are many home countries who do not approve and may even boycott those who use outsourcing from other countries in essence to provide more home jobs.
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