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Outsource Done By Sigourney Wright Outsource/ Outsourcing What is Outsource/ Outsourcing? Outsourcing is the act of one company contracting with another company to provide services that might otherwise be done by in-house employees. Often times tasks which are outsourced can be performed by by the company itself. Types Of Outsourcing B.P.O (Business Process Outsourcing) : A particular process or task is outsourced. E.g. Payroll, B.P.O work can be office related or customer oriented such as answering calls or technical work. K.P.O (Knowledge Process Outsourcing) : This calls for higher involvement of the worker, the worker has to employ advanced levels of research, analytical and technical skills and have to make decisions of a higher order than B.P.O workers. Offshore Outsourcing : Literally means outsourcing your activity to one who is not on your shore or beyond your shore. Types Of Outsourcing Cont'd I.T.O (Information Technology Outsourcing) :This is the buying of Information Technology products or services that could be furnished in-house, from one or a variety of sources on the Internet. Manufacturing Outsourcing: This involves the physical moving/ transportation of the products from one place to another. The common manufacturing outsource process involves manufacturers outsourcing different processes from developed countries where the manufacturer is located in developing nations. Example Of Outsource This picture shows how companies in the USA seeking services from countries outside of their country such as China, India etc. Reasons Why Companies Choose Outsourcing If A Company is looking to expand, Outsourcing is a cost- effective way to start building foundations in other countries. Outsourcing allows companies to focus on other business issues while having other details taken care of by outside experts. Outsourcing allows companies to reduce their turn around times (Time it takes to get a job done and deliver the output), by taking advantage of the time difference between countries. Thus, allowing firms to reduce time to market new products and improvements, beating rivals who do not use outsource. Reasons Why Companies Choose Outsourcing Cont'd Saving Labor Costs are perhaps the one of the most important reasons why companies opt to outsource some of their activities. The cost of labor in some developed countries is extremely expensive thus, creating a large expenses for employers. If the same jobs were done by persons of the same qualifications at a far lower price then it would definitely be advantageous. Firms around the world are desperately trying to make use if their in house talent pool. Expertise and experience are in short supply, but in high demand and are quite expensive . Outsourcing helps dissolve the dilemma and frees large pool of in house resources for other work. Disadvantages Of Outsourcing Loss Of management control of business functions meaning that you may no longer be able to control operations and deliverables of activities that you outsource. Problems with quality can arise if outsourcing provider does not have proper processes and or he/ she is inexperienced in working in an outsourcing relationship. Not understanding the culture of the outsourcing provider and the location where you outsource may lead to poor communication and lower productivity. Disadvantages of Outsourcing Cont'd There is a risk of losing sensitive data and the loss of confidentiality. Therefore it is important to have a place to avoid data loss. If important functions are to be outsourced, an organization is mightily dependent on their outsourcing provider. Risks such as bankruptcy (A legal proceeding by which a person or company is unable to repay outstanding debts.), and financial loss cannot be controlled. Effects Of Outsourcing On: A company is: Lowers costs in labor to achieve a greater profit. The Country of the outsource provider : economic growth and the creation of of new industries in areas which have lacked jobs. The Country of the company's Origin : There are negative effects not hiring of local employees which can contribute to the country's unemployment rate, the closing of factories in home country to expand or move to less developed country. This is called "Shipping Jobs Overseas." In Some cases the company might choose to expand its operations to the less-developed country rather than expand in its home country. The End !!!!!! Game Time!!!
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