Outsourcing is a practice in which an individual or company performs tasks, provides services or manufactures products for another company. The term itself is often referred to as offshore outsourcing, for the purpose of this essay we will like to talk about the export of labor and manufacturing by Apple Inc, Nike and Walmart to companies outside of the United States. Outsourcing has three main advantages, let us talk about a few of the reasons why a company will decide to outsource verses insource.
The greater economies of scale will be a factor a company will consider when deciding whether or not to outsource; the ability to mass produce, to lower the initial fixed costs per unit, by spreading the cost out over a larger number of units. This economy of scale can be achieved by a third party that is able to pool the needs of a large number of firms, therefore making it cheaper for that third party to produce specialized goods and services. Also the ability of a specialist outsourcing firm to keep up-to-date of the latest developments in its field, this is very significant in the field of technology. Lastly, outsourcing enables small firms to do things for which they cannot hire full-time employees for. These will apply to the
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In the early years of the company’s expansion Sam Walton decided to reach across the Pacific and make imports a pillar of Wal-Mart's business model. This model forced his American suppliers to cut down costs, stressing sales volume over high margins, and wowing customers by showcasing one super low-priced item. According to the Economic Policy Institute, Walmart’s imports helped to destroy 200,000 U.S. manufacturing jobs alone, while the total number of job losses due to Walmart’s outsourcing is believed to be 541,000 as last recorded in 2013. In fact, from year 2001-2013 that is a difference of 415,000 plus jobs. (Scott) The conditions are only getting worse for the
Outsourcing is a method used by many corporations in which their products are manufactured in foreign countries often for cheaper labor.This method method of productions has it’s pros and cons.
The dawn of the outsourcing era. Many large U.S. corporations cultivates outsourcing faster than we can imagine. The trend that began in the late 1970 and picked up speed in the 1900s with the opening trade with China, India, and Eastern Europe (“Outsourcing: What’s the true Impact”). In its broadest sense, outsourcing is simply contracting out functions that had been done in-house—a longtime U.S. practice (“Globalization: Threat or Opportunity”). Subsequently, outsourcing is an essential part of globalization; and it is the combination of markets through the cooperation of internalization, federal, and state governments with corporate companies to produce products on a reduce production cost, and offer services on lower labor cost. When a U.S. manufacture product, and buys material from an intermediate supplier from out of the country rather than producing them in-house, that is what is called outsourcing. Also, when U.S. corporation hires outside contractor out-of-the-country to do U.S. call center services for less labor cost that is outsourcing. When a company deals out its operational task, such as payroll, accounting, and software operations that is outsourcing. Obviously, all of these examples seem to benefit and in favor of the corporations. To get the clear understanding of outsourcing for major corporation perspective, I have interviewed IKEA’s U.S. Deputy Retail Country Manager Rob Olson about outsourcing—Swedish
The practices of Wal-mart has impacted American workers and our economy in unthinkable ways. Charles Fishman reported that the chain is ‘helping accelerate the loss of American jobs to low-wage countries such as China.” Walmart has doubled its imports from China from 1999 to 2003, buying some 12 billion in merchandise in 2002. Fishman also states that “The giant retailer is at least partly responsible for the low rate of U.S. inflation, and a McKinsey & Co. study concluded that about 12% of the economy's productivity gains in the second half of the 1990s could be traced to Wal-Mart alone.” One way that I as a consumer confront the problems caused by globalization is to shop at local business that do not produce their products in low wage
One of the primary reasons Wal-Mart owners purchase foreign-made goods is that those imports are often less expensive and have great bargains. In the late 1970’s and early 1980’s, Sam Walton, the founder of Wal-Mart, went overseas looking for goods to sell in Wal-Mart stores.1 “Low cost imports from Asia became a vital compound of Wal-Mart’s low opening price point strategy,” says Hendrick Smith, an esteemed journalist from the New York Times.2 Hendricks’s research shows that Wal-Mart stores make more profit on the items manufactured in China than on items that are manufactured in the United States. Other big brand retailers, such as K-Mart, Home Depot, Target, etc… have followed Wal-Mart’s example and long since turned to foreign production. Wal-Mart’s power has made a tremendous impact on American made companies, giving them no other choice than to negotiate on the very low prices for their products. Gary Gereffi, a Duke University professor who studies global supply chains, said in a PBS interview, “Wal-Mart is one of the key forces that propelled global outsourcing - off-shoring of U.S jobs - precisely because it controls so much of the purchasing power of the U.S. economy,” Wal-Mart used its buying power to force local small businesses into squeezing their costs and keeping their profit margins very
Initially, the purpose for offshoring was due to producers wanting to lower fixed costs and also seeking lower waged workers. By moving job duties abroad, producers were also able to avoid unionized workers (Gupta & Sao, 2009). In recent years, offshoring has also become popular in higher waged jobs such as software development. Outsourcing is very similar to offshoring, where a firm purchases inputs or services from another firm, but the firm is also located in the United States (Harrison & McMillan, 2006). A staffing agency is an example of outsourcing. A company is assigned by a client, and employees of the staffing company work directly with the employees of the client (Houseman, 2007).
clear. It simply shoes some arguments of a proponent and a opponent. We still need hard evidence
As described in the article, “Outsourcing - Pros And Cons” by Kristin Carpenter; “Outsourcing is basically the practice of one company to contract another company to provide the services that could have been performed by their own staff…. One of the main reasons why companies are into outsourcing is diminished company resources, both in financial terms and in manpower costs” (Carpenter). Because the most powerful American corporations in the U.S are no longer producing their merchandise in the U.S but in developing nations, in order to reduce the cost of labor and increase productivity, the United States no longer has companies that produce jobs in America. And due to the gradual growth of the use of outsourcing, American employment opportunity has decline greatly, leaving many people unemployed and harming our economic strength in the world.
Outsourcing production refers to the contracting and subcontracting of manufacturing activities to occupy labor, time, money and facilities which give business a competitive edge. It is regularly a vital part of reengineering and downscaling. There will have various strengths that businesses could contract out such as designing, data processing,
Many businesses in United States manufacture their product overseas. This involves manufacturing products outside United States where the labor cost is cheaper. Because of cheap labor, it is often more economical for a U.S. company to manufacture overseas and pay the shipping costs than to manufacture in the United States. For a company, the savings may be substantial. However, there are negative impacts on U.S. employment, as many jobs in the United States are being outsourced and replaced by overseas positions. The manufacturers outsource production projects to save time, money or resources. The manufacturing is outsourced so as to remain competitive and maintain a steady work flow. Without outsourcing, manufacturing costs could escalate to the point at which no product would sell and all employees would have no work. Outsourcing comes
The first one is the industry and the second one is the new technologies that become an important part of the core business of the firm. Following the external forces are the internal reasons that push a firm to outsource. Although many have been identified in the literature, the most relevant refer to reduction of costs, focus on the core business, avoid the investment in specific assets and increase in efficiency and performance. A ranking of these reasons is presented in Figure 2 (Pai, 2007).
In analyzing the second reason listed for why outsourcing is used; ‘inability to attract the highest caliber of employees to job functions that may be peripheral to the organization’s core discipline’, companies employ a different kind of outsourcing tactic. This reason leads to offshore outsourcing solutions. If a company cannot attract high caliber domestic employees to job functions secondary to their main function then they seek help where labor may be less expensive and more efficient.
Outsourcing refers to hiring an outside, independent firm to perform a business function that internal employees might otherwise perform. Many organizations outsource jobs to specialized service companies, which frequently operate abroad. The outsourcing trend stands to continue; the latest wave of outsourcing impacts the information technology field. IT outsourcing includes data center operations, desktop and help desk support, software development, e-commerce outsourcing, software applications services, network operations and disaster recovery.2
Companies that decide to outsource do so for a number of reasons. The primary reason is to achieve cost savings or better cost control over the outsourced function. Companies usually outsource to a vendor that specializes in a given function more efficiently than
Eminence GenSource is a dependable and trustworthy outsourcing company to help you in the smooth conduct of your non-core business processes, thereby helping your business to focus more on core areas. Outsourcing certain back office work is the wiser decision that every company chooses, because it lessens time, resource, and money that you can save to concentrate more in enhancing your business and gain more profit. We value our clients as we put forth them first to bring best result out of a every/great effort.
Knowledge process outsourcing is one step ahead of business process outsourcing. KPO is basically a knowledge-related and information-related work carried out by Best KPO companies in Kenya to save cost. It mainly involves transfer of business processes necessitating specialized domain-specific knowledge and business expertise of a higher level to other geographic locations. With globalization flattening the world, it has become increasingly significant for organizations to utilize Best KPO companies in Kenya to stay competitive. This gives them the advantage of improving efficiencies, minimizing their costs and shifting the focus onto the key growth areas of their business. Outsourcing KPO services in Kenya offers companies with greater benefits, as they can get access to domain-based processes and advanced research & analytical skills, rather than just process expertise. This typically involves high-value work carried out by expert staff.