Question

How do you view outsourcing?

Considering all of the stakeholders of a business (owners, employees, shareholders, customers, and the community in which the business operates), who stands to benefit the most from outsourcing?

Have you or a friend or family member been impacted by outsourcing? If so, please share your experience to the extent you are comfortable.

According to Investopedia.com, “outsourcing” is defined as “a practice used by different companies to reduce costs by transferring portions of work to outside suppliers rather than completing it internally.” Further, “outsourcing is an effective cost-saving strategy when used properly. It is sometimes more affordable to purchase a good from companies with comparative advantages than it is to produce the good internally. An example of a manufacturing company outsourcing would be Dell buying some of its computer components from another manufacturer in order to save on production costs. Alternatively, businesses may decide to outsource book-keeping duties to independent accounting firms, as it may be cheaper than retaining an in-house accountant.”

There has been much controversy and concern in the business world and in our overall economy in the U.S. regarding the outsourcing of many jobs, particularly in the manufacturing sector, from the U.S. to foreign countries. This is not just a U.S. problem; there are recent concerns of outsourcing in Germany and Brazil, for example.

Some of the benefits of outsourcing are seen as lower overall costs, potentially less government regulation and increased profits. Often cited detriments of outsourcing are bad publicity (“taking jobs away from Americans”, etc.) and reduced quality of goods and services unless an employee of the U.S. company can be on site to oversee the work.

Answer 1

Ans) Similar to several things even Outsourcing has two sides to it, positive and negative. The only thing that should be taken into consideration is the level of severity of the either and to know the source and branch that is getting affected by it.

In simple terms, outsourcing can be defined as the process in which a company hires a third party/an alien company, a company with no relation to its organization, either within the country or outside to get its job/work done, considering the cost cutting factor.

Mostly the company or organization to which the work is being transferred is at the gaining end, since they are able to generate more revenue for themselves along with being able to offer more jobs and employment. And on the hand, although the company transferring the work is also benefitted in monetary terms, but may have to go through a lot of criticism because this may cost jobs to numerous people which is indirectly a loss on human grounds, creating chaos in several lives affecting not only an individual but a family altogether.

If a company is able to increase its productivity, where in it is able to retain it's own employees with a requirement of more employees in order to take care of the increasing productivity and to meet the demands, and if such a scenario outsourcing takes place, can be considered to be positive to quite an extent on both the ends.

Thus, outsourcing is quite a complicated process, which may prove to be regressive as well harsh and may also prove to be beneficial on both the ends.