Question

Many have claimed that outsourcing by American companies is costing American jobs. However, companies claim that they cannot compete if they do not cut cost and one effective way of cutting cost is to have some of your goods produced outside the U.S. Do you agree? Discuss some of the advantages and disadvantages of outsourcing. The following sites should help.

Answer 1

Yes I agree with the statement.

OUTSOURCING

Let us first discuss about the the topic "outsourcing". Actually what does the outsourcing means, the outsourcing means the agreement made by the company in which the company shares the ongoing activities and other functions of the company with an another company. So the company can share their ongoing activities with the company that they have made an agreement.

One of the main reasons in which American companies follows this outsourcing method as an action to cut their current costs. The reason for this is America is the most developed nation in the world and by which the average salary, functioning costs and the Maintenance cost will be very high when compared to the developing nations. The developing nations can provide this functions in a low relative cost than others can provide. The result is that the total cost will be considerably lower than what they actually costs in America.

ADVANTAGES OF OUTSOURCING

There involves many advantages with the outsourcing. The main advantage is the cost cuts as mentioned above. Many of the sectors can produce a large margin profit by doing this. For example a call center started at India can operate in a very low cost than America and the company can earn more by this. And also the company can access the skilled experts when they open their window to a new land. The company can also operates as 24 hour basis when they locate their Program in a country like India or Bangladesh. Because the time margin is that much different in these nations.

When a contract made with another company in an outside nation, there involves a sharing of activities between the nations. Hence the company has to concentrate on the core activities only. This outsourcing will be a strategic plan adopted by the company and they can maintain their functions smoothly and this will give a high competition to other companies. The overall performance and overall business of the company will definitely rise.

DISADVANTAGES OF OUTSOURCING

The most important advantage is that by the outsourcing the company will definitely loss some control over the functioning. The decisions taken by the firm must depend on the company that they have made agreement with it. The jobs will for the native people will be also lost due to the outsourcing. There is another possibility for the security policy of the Company, it will put in a risk factor. The quality of the products will be also questioned in some situations.

The problems with dealing the native workers is also going to be bit difficult, because it is not easy to communicate with the native low grade workers who only aware of the native language. And when outsourcing with a company who located in different time zone it is not easy to pick a meeting time with the officials.