Essay on Outsourcing Summary
This essay on outsourcing delves into the practice of outsourcing, highlighting its primary motives and advantages for businesses. It emphasizes that outsourcing offers cost reduction, access to specialized skills, and adaptability during peak periods. Outsourcing is presented as a means to acquire innovative technologies without substantial in-house investment.
The essay on outsourcing also underscores the positive influence of outsourcing on industrial relationships and flexibility, categorized into functional, wage, and numerical flexibility. The text suggests that outsourcing provides financial savings and capital for investments in core areas of a company. However, it cautions that outsourcing decisions, when made incrementally and collectively, can potentially compromise a firm’s competitive edge. The essay acknowledges that outsourcing may not be universally suitable for all business functions.
Essay on Outsourcing
The major reason for outsourcing seemed not only to lower costs but also to access special skills and meet demands during peak periods and the capability to carry out specialized or made-to-order work. ‘Outsourcing enables companies to gain the benefit of the latest and most innovative skills and technologies without investing directly in their development or taking more risk than they need to take.
Outsourcing also brings in much-needed change in companies. Contractors can bring to the companies more specialized and improved ways of undertaking the given tasks. This is especially essential if the organization has work practices that are no longer relevant or economically feasible.
Another benefit is the enhanced industrial associations that come from shifting industrial relations responsibility to the contractors. The various forms of flexibility included “functional flexibility” which would be used for attempting new and innovative production processes.
Next was “wage flexibility” which is connected to productivity and production demand and then there is “numerical flexibility to regulate labor contribution to product requirements.
Most companies are using all three forms of flexibility although the actual methods have been limited to multi-skilling, performance-related payment schemes, and the greater use of part-time, contract, and casual work.
Outsourcing
This essay on outsourcing delves into the practice of outsourcing, highlighting its primary motives and advantages for businesses.
Outsourcing is used in all forms of flexibility since it involves the buying of merchandise or services that were carried out internally before the company decided to outsource. This gave management the capability to achieve greater flexibility as payment is to be made for work completed.
All the tasks that are outsourced are contract work which does not involve a high degree of skills and the number of contract employees needed is according to work requirements only. This is quite important for those companies that experience seasonal fluctuations in the demand for their products and services. This ensures that the product produced is of the best quality and at a competitive price.
It is obvious that the real reason for outsourcing is to save money and does not form any part of a logical or rational company strategy. Outsourcing also frees capital to be invested in the segment where the company enjoys a viable benefit.
Outsourcing does have its negative aspects as these decisions are usually incremental. Several such decisions made and carried out individually might be beneficial, but such decisions made collectively might compromise the organization’s competitive capability. Major products may have to be conceded and the company might end up dependent on several suppliers.
Another factor is that standard accounting practices might not be capable of providing the required cost information on which decisions can be taken. Therefore, experts say that outsourcing may not be the best solution for all functions.
