Though outsourcing offers many potential benefits for product development as it may be used to speed up processes and reduce staffing costs; these benefits are speculated and not always certain. As a result, organizations must not overlook the possibilities of failure due to outsourcing. Because of the inherent nature of outsourcing, vital jobs are extremely distant from central headquarters, and control is essentially being shared and sometimes completely transferred to a third party (Rozet, 2009). Some innovation risks associated with outsourcing product development include loss of confidentiality, possible losses of technological core competencies, loss of managerial control, loss of control of outsourced activities, and hidden costs …show more content…
For pharmaceutical companies this may include a “range of scientific, medical, regulatory, and commercial disciplines (Lowman & Trott, 2013).” Furthermore, communication of goals, strategies and tactics can be challenging to translate between distinctive business cultures. The concept of cross-communication is very important because in addition to outgoing communication from the organization, the third party must have the capacity to absorb and manage the new knowledge. Cultural measures like “power distance, individualism, uncertainty avoidance, long-term orientation and masculinity,” learning culture, motivation, and creative climate must be researched and understood so that they don’t become cultural barriers and they could pose unique management challenges (Robert, 2014). Culture also plays a role in choosing to outsource because firms must leverage the talent in the emerging markets in order to choose which aspect(s) of the idea generation process they need to outsource. From manufacturing to production to distribution, firms can leverage the outsourced according to their innovation potential as well as willingness to acclimate to the firm (Gobble, 2013). Acclimation may range from those who prefer to “operate within strict parameters to those who value operational autonomy in order to
As the world has gotten “smaller” in terms of trade, outsourcing has become a hot topic in much political and economic debate in the United States.
The exporting of American jobs is an issue that is important and will become increasingly so as more and more white collar jobs are shipped overseas. American companies in the past few decades have been sending American jobs overseas paying residents of other countries pennies on the dollar what they had paid American workers to do. This saves the companies millions of dollars on labor costs but costs Americans precious jobs.
It is difficult to determine whether offshore outsourcing has a positive or negative effect on the U.S. economy. It may actually depend on which perspective you take on it. As stated by Hira and Hira (2005), outsourcing in the services sector is a major shift in how the economy operates and will have serious impacts, both positive and negative, on the trajectory of economic growth, distribution of income and the workforce. However, there are many factors to take into account when considering globalization. Companies must familiarize themselves with the various rules and regulations of global business, tariffs, trade agreements and barriers, and decide how to go global; global consistency or local adaptation. All of these issues affect
In business, the outsourcing involves the contracting out of a business process to another party. In this case, USTech has outsourced its product to TaiSource. As a result, USTech enjoys TaiSource’s world-class research, design, and lower manufacturing costs. USTech gets the benefits of direct sourcing in China without the hassle of coordinating it. But this behavior has some inherent limitations. USTech is afraid that TaiSource could reap its confidential information and start its new brand in Mainland China. Therefore, a global enterprise should weigh the pros and cons of its outsourcing strategy.
Abstract This paper will discuss offshore outsourcing and the effects it has on the American worker in a technology environment. We begin with the scope of the problem and how it has changed the economy for better and for worst. Various figures representing miscellaneous data about off shoring will be represented. The topics include the background and nature of offshore outsourcing, reasons for outsourcing, why trading promotes gain, current economic standing from outsourcing, and finally how outsourcing affects wages and employment. In the summary various solutions and ideas are given to propose a change to the industry in hopes that the American worker will be more prosperous from an economic standpoint.Introduction
Among the American society there is a controversy over the rising popularity of corporations internationally outsourcing American jobs. You may be asking yourself what is international outsourcing? It can be defined as a strategy corporations use to send jobs within their company overseas. These jobs originated in the corporations’ country prior to being outsourced to other countries. The reason for such actions can many times be attributed to the cheaper labor or for strategic business reasons. Over the past fifteen or twenty or so years, international outsourcing has become popular among many corporations. International outsourcing is beneficial for our economy and the job market for three main reasons. Through such actions
“The rights of every man are diminished when the rights of one man are threatened” (Kennedy, 1963). Continuous improvements in technology capabilities have provided companies with tools to more easily conduct business on a global scale. However, when conducting business with different cultures, you risk different ethical standards. Companies should be accountable for ensuring their product or services can be received by the consumer in good conscience, void of human ethics violations, regardless of where the product or service originates; and consumers should not patronize companies that cannot ensure this trust.
In the contemporary society, the problem of outsourcing activity has been sparked spirited debate. Wu et al. (2013) had published a statement, and argue that there are two risks of outsourcing. However, Reagan and Chauanxu (2002) advise outsourcings to pay attention to identifying hidden risks and preventive. While out sourcing involves a variety of risks for different industries, strategies can be improved and risk mitigated through different approaches. Therefore, whether this view is consistent with today 's outsourcing situation, as well as this issue will be discussed. First at all, this document explores the concept within the outsourcing. Then, there are lot of the actual business case will be used as a basis. Analyzing risks and challenges of outsourcing. After that Wu et al. (2013) who issued a statement, the results of the issues discussed in the outsourcing risks will be evaluated. Followed by those questions that how to operational outsourcing, select outsourcing and manage outsourcing will be argued. At the same time, appropriate suggestions will be made. Finally, evaluate the solution, and give a critical conclusion on the issue.
The precise meaning of culture seems too difficult to grasp, but it might be described as shared values, behaviors and assumptions that distinguish one group from another and are passed on from one generation to the next (Schein. E, 1990). Culture can leave a very significant influence on cognition and perception without even being aware of it (Schneider S.C., Barsoux J.L. and Stahl G.K., 2014). So culture differs from country to country at some extent. National cultural differences is the top reason why an alarming rate of up to 70% of joint ventures fail (www.ugmconsulting.com). Also, it is of vital importance when dealing with cross-border management issues. Therefore, this reflective essay aims to critically evaluate four
Outsourcing was not the only way low-wage foreign workers affected the work force in the 1800s. There were also millions of immigrants added to the workforce. When that many new workers were added to the labor force, of course it was not without effect on industrial wages—they were driven down.
What is outsourcing? We have all heard the term thrown around but what does it really mean? Outsourcing is defined as contracting, sub-contracting, or 'externalizing' non-core activities to free up cash, personnel, time, and facilities for activities where the firm holds competitive advantage(BD,09).Outsourcing happens when company’s choose to purchases their needed products and or services from an outside supplier ( mainly other countries), rather than doing the same work within their own facilities.
“Outsourcing refers to obtaining certain services or products from a third party company, essentially sourcing something like accounting services or manufacturing of a certain input to another company. While many think outsourcing refers to using a service provider in another (usually cheaper) country that is not necessarily the case. Outsourcing can be done to a company that is located anywhere, the location isn’t important.” ("Offshoring vs. Outsourcing," n.d.). There are many reason a business would choose to outsource, some of those reasons could include cost, specialization and flexibility.
In the current business world, cutting costs and allocating resources with the best quality is one of the most widespread and familiar concepts to many business owners. To achieve proper efficiency and effectiveness, outsourcing seems to be common among different types of businesses, not just ones with larger amounts of profit or total assets. Seeking outside help through various countries is one of the key factors that can assist with the potential reputation of a business because cheap labor and satisfactory quality push for better organizational structures. Benefits such as these have evolved into becoming the norm for companies to follow; in Chapter 6 of Contemporary Management, global outsourcing demonstrates a positive effect on businesses and ties into the notion of globalization, which can connect individuals through overseas market strategies.
Development of specific skills: Out sourcing benefits the development of specific skills at a corporation level the same way off shoring does at a global level. Companies outsource in order to take advantage of specialized skills and knowledge that itself does not own or that can’t be efficiently acquired. In this case out sourcing leads to higher efficiency and better quality provided by third parties for a specific business processes. Moreover the third parties can further specialize to take advantage of the resulting economies of scale and mitigate the possible shortage of specific skilled and talented workers.
“Outsourcing is the transfer of control of a process or product to an outside supplier”(Hasan).