Course: BUS 104-B050 | Intro to Business | Professor Buckler | Spring 2022

Outsourcing & Offshoring

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    • #11102

      Brielle Buckler
      Participant

      Few topics associated with global trade are more vehemently debated than outsourcing. For this discussion, you will watch two video clips that provide some perspective on outsourcing. Using the information you gain from the videos and the materials you studied in the course module, respond to the discussion question below.

      This video clip is from the film Outsourced. It covers American sentiment on losing jobs to India and the availability of Chinese goods. We want cheap stuff; however, most of it comes from China.

      As countries like China and India become leaders in manufacturing, the costs of their expertise rises, diminishing their advantage against U.S. counterparts. At the same time, convoluted and increasingly risky supply chains dependent on inexperienced vendors have turned once stable brands like Boeing into the perfect “reshoring” case study. This video explains why outsourcing can be bad for business.

      For Discussion
      Select ONE of the following perspectives on outsourcing, and answer the related questions. Although your opinion is always valued, be sure to support your opinion with facts obtained from your course materials, the videos, or a reliable source. Make sure to cite your sources.

      • The consumer: Does the consumer benefit? Are prices lowered by outsourcing? Why or why not?
      • Efficiency and productivity: Does outsourcing enhance efficiency and productivity? Why or why not?
      • Competition: Does outsourcing encourage competition? Is this a good thing? Why or why not?
      • Developing countries: Does outsourcing benefit developing countries? Why or why not?
      • International stability: Does outsourcing foster international cooperation, respect, and stability? Why or why not?

      ————

      In order to receive full credit for this assignment, all components of this assignment are due by 11:59pm ET on Friday, April 15, 2022. You should first contribute a thoughtful post of your own before viewing/commenting on the posts of others.

      Once you submit your post, you must respond meaningfully to at least two other classmates’ threads. This assignment is worth a total of ten (10) points — 6 possible points for your original post, and up to 2 points for each of the two responses to your classmates’ posts. Please reference our Discussion Rubric for more information.

      Source: Lumen Learning

      • This topic was modified 3 months, 1 week ago by Brielle Buckler. Reason: Updated Date / Rubric Link
    • #11491

      Zakaria Ahmed
      Participant

      Re-appropriating and offshoring are frequently utilized equivalently, in any case, the terms as a matter of fact have two totally different implications and suggestions. Reevaluating is the point at which an organization arranges an agreement with an outsider to fill a particular role. While rethinking an interaction or activity, it is crucial to observe an organization or individual that represents considerable authority in the main job. Notwithstanding, offshoring is the point at which an organization sends in-house tasks to be acted in another country. An instance of offshoring is for a United States-based organization to create their merchandise in Mexico. Both of offshoring and re-appropriating eventually set aside organizations cash yet they diminish costs in altogether different ways.

      Offshoring is when production operations are performed in another country. Offshoring is often criticized for transferring jobs to another country but it can be extremely beneficial for companies and can ultimately improve the economies in both countries.

      Outsourcing has become increasingly popular with companies as a way to reduce overhead costs and increase profit margins. Outsourcing occurs when a company entrusts a part of their business process to an outside vendor. Outsourcing possesses a myriad of benefits, some of which are:

      • Outsourcing can save costs by accomplishing the same task for less money. However, just because the task is being accomplished for less money does not mean that the quality will decline. One of the most attractive aspects of outsourcing is the reduction in cost while still receiving high quality services.
      • Outsourcing can increase efficiency by entrusting business processes to third-party vendors that specialize in that specific area
      • #11559

        Mohamed Hossein
        Participant

        Hi Zakaria! I think you not only explained offshoring very well, but you gave an example of what offshore is. I feel like offshoring occurs way more often than we know it does, because there are plenty of things that are operated in  other countries. We can see this when we look at items that might say “Made In China”, or any other country which something was made in.

      • #11567

        Nadia Khan
        Participant

        Hi Zakaria. Great job at explaining what outsourcing and offshoring is. I completely agree that outsourcing has and continues to become more popular. I understand why if its saving a company money, resources, and helps increase efficiency. I agree that offshoring is very beneficial as well, in the sense that it benefits both parties improving both countries economies.

    • #11558

      Mohamed Hossein
      Participant

      Outsourcing describes the involvement of a foreign company in the dealings of another company, especially to procure goods or services. This happens even when the company can procure the commodities within the company. Outsourcing is best explained by a company that chooses to receive supplies from a foreign country even when it has the option of getting the supplies from a domestic company.

      Outsourcing enhances efficiency through increased and better productivity. Outsourcing occurs when the company in question cannot make the required product or service by itself. Therefore, this enables the employees to focus on what they do best and allows for the outsourcing of the commodities or services they cannot make (Fernandez, 2019). This enhances employee satisfaction because they are not pressured to produce products or provide services they are not well versed in, and the company executives expect excellence in the same. Therefore, when outsourcing is done right, it enhances productivity by enabling workers to only engage in producing commodities and services they have majored in.

      When the employees focus on the regular activities in which they specialize, it allows for the outsourcing of non-core functions of the entity’s routine, which may consume much time that could be spent better on being productive. Some of the outsourced activities in companies are primarily services and entail regulatory administration, data entry, advertisement, recruitment, and enrollment. When these are outsourced, and employees continue to work on their specific tasks and projects, productivity is enhanced because there is focus without hindrances (Bilal, 2021). When productivity is enhanced, efficiency is inevitable because increased productivity brings about more revenue hence heightening efficiency. Additionally, efficiency is attained through the specialization of employees in particular tasks, thus improving physical capital.

      References

      Lee, G. R., Lee, S., Malatesta, D., & Fernandez, S. (2019). Outsourcing and organizational performance: The employee perspective. The American Review of Public Administration49(8), 973-986.

      Bilal, A., & Lhuillier, H. (2021). Outsourcing, Inequality and Aggregate Output (No. w29348). National Bureau of Economic Research.

    • #11562

      Kevin j Pena
      Participant

      Outsourcing is the way most major companies make their products. This is because outsourcing usually enhances productivity. It can also match and even enhance efficiency in the product or the way a company runs. This is because it may alleviate these burdens from current employees. According to an article from Forbes.com this is one of the factors that goes into a company’s decision to outsource. That same article points out a potential downside is that a company does not hold direct oversight over the production process. But through proper communication any issues can be corrected when detected. It is also economical for a company to outsource because on average you pay a fraction of the price. One example is the price difference for hiring a team shown in the classicinformatics.com article. If they in-house the production the cost of hiring an entire team rounds out to about $170,000 while outsourcing it will only cost around $74,000. That estimated price difference alone shows the main reason most companies outsource.

      Another thing outsourcing can do is benefit the country that houses the production company. The funds get put into the company, its employees and that country’s economy. Because most of those countries usually don’t have strict regulations most of the money stays with the company which usually underpays the employees. However if it wasn’t for that company those employees would have no income at all. So even though it’s not the most ideal economic split in a production company it is better than none. That company also has to pay taxes in their country which helps sustain the economy of most of those countries. Now what happens to the money once it reaches the country’s government cannot be controlled. But once again it is better that something enters rather than nothing entering its economy. It also creates an opportunity for those people to learn skills to work at some of these production companies. Whether it be tech skills to produce a form of information technology service or skills of a specific trade to create a car or clothes at such a company. These opportunities would not be as helpful if it wasn’t for outsourcing. Outsourcing in the end does benefit developing countries as much as it can.

      https://www.classicinformatics.com/guide/outsourcing-costs-entrepreneurs?hs_amp=true

      https://www.forbes.com/sites/forbesbusinesscouncil/2022/01/28/in-house-or-outsource-whats-better-for-a-large-enterprise/amp/

      • #11570

        Syeed Salvant
        Participant

        Hey Kevin, The article that you linked was a good read and it does well explaining how the pandemic affected outscoring.  You also do a great job using the two articles you linked to help back up your claims about outscoring and its benefits.

    • #11563

      Amanda Hines
      Participant

      Outsourcing today is rather different than it was 10-15 years ago. Offshoring production has become more exposed to the everyday consumer with the rise of technology and awareness of the conditions in these areas. Does the consumer benefit from this, sure, if the only concern was cost. As Haley Edwards embraces in her TedX Midatlantic speech, its no longer just about global trade and efficiency, it should be about global prosperity. Ethically, consumers are making different choices in the companies they support and with so many businesses utilizing under-developed countries, its not always easy to do the leg work and research on brands and their efforts to maintain fair conditions oversees. Additionally, today’s container and freight costs have gone up significantly and product is sitting in water for 6 months before they reach stores. Who’s paying the price, the consumers.

       

      References:

      Haley Edwards. (2016). TedX Midatlantic: New Rules.

      TEDxMidAtlantic 2016 Talks | TEDxMidAtlantic

      • #11568

        Nadia Khan
        Participant

        Hi Amanda. Great explanation on outsourcing and how it affects the consumer! It is for these reasons why I am more passionate about supporting small businesses. A few years ago I dont know if you remember but many big brands were exposed of taking advantage of factory workers in third world countries to manufacture their clothes, and refused to pay them. Ethically it is very wrong and it’s not something I support and am not willing to pay for, especially since one of these countries were Bangladesh where I am from! But great job at explaining the reality of what a consumer is paying for.

      • #11575

        Syeed Salvant
        Participant

        Hey Amanda, The perspective of the consumer is always important, and the way you explained it and implemented information from your chosen article was informative and educational.

    • #11564

      Jamal thomas
      Participant

      In terms of competition, outsourcing/offshoring can certainly be said to promote/include competition, usually to high degrees of control and comparison. An article written by author James Jeffery talks about China’s presence within the outsourcing relations with various countries and also how Africa has gradually (or rather in a low-radar sense) managed to move factories and miners into Africa in order to not only increase productivity, but to harness untouched/valuable minerals and resources. A quote from Helen Hai (chief executive of the Made in Africa initiative, United Nations industrialization ambassador) stated that “China is now at a stage like that of Japan in the 1960s and the four Asian Tigers in the 1980s, to begin relocating its light manufacturing to other countries because of its rapidly rising labor costs”. With China being declared the  “World’s Manufacturing Superpower” in 2019 by Statista.

      Infographic: China Is the World's Manufacturing Superpower | Statista

       

      Not to mention the documentary made in 2013 by verified creators “Guardian Investigations”, which took a look at how mining minerals and resources in Africa via Chinese officials were not only being permitted, but also conducted.

      Overall it can be considered a good thing in the benefit of production, but the potential clash between countries and manufactures due to outsourcing/offshoring.

       

       

      <b><span data-contrast=”auto”>References/Work Citations</span></b><span data-ccp-props=”{"201341983":0,"335551550":2,"335551620":2,"335559739":160,"335559740":259}”> </span>

      <span data-contrast=”none”>Jeffery, James  </span><span data-contrast=”none”>”Africa: China’s China?”</span><span data-ccp-props=”{"201341983":0,"335551550":2,"335551620":2,"335559739":160,"335559740":259}”> </span>

      <span data-contrast=”none”>(DHL, 2016), Accessed April 15th, 2022 </span>

      <span data-contrast=”none”> Retrieved from: https://www.dhl.com/global-en/delivered/globalization/africa-chinas-china.html#:~:text=But%20now%20Chinese%20firms%20are,a%20massive%20potential%20factory%20workforce.</span&gt;

       

      <span data-contrast=”none”>Investigations, Guardian  “The price of gold: Chinese mining in Ghana documentary</span><span data-contrast=”none”>”</span><span data-ccp-props=”{"201341983":0,"335551550":2,"335551620":2,"335559739":160,"335559740":259}”> </span>

      <span data-contrast=”none”>(Youtube, 2013), Accessed April</span><span data-contrast=”none”> 15</span><span data-contrast=”none”>th</span><span data-contrast=”none”>, 2022</span><span data-ccp-props=”{"201341983":0,"335551550":2,"335551620":2,"335559739":160,"335559740":259}”> </span>

      <span data-contrast=”none”> Retrieved from: https://www.youtube.com/watch?v=ohrrE1rjzLo</span&gt;

       

      <span data-contrast=”none”>Richter, Felix  </span><span data-contrast=”none”>”China Is the World’s Manufacturing Superpower”</span><span data-ccp-props=”{"201341983":0,"335551550":2,"335551620":2,"335559739":160,"335559740":259}”> </span>

      <span data-contrast=”none”>(Statista, 2021), Accessed April 15th, 2022 </span>

      <span data-contrast=”none”> Retrieved from: https: https://www.statista.com/chart/20858/top-10-countries-by-share-of-global-manufacturing-output/</span&gt;

       

      • #11572

        Lingjiao Gong
        Participant

        <span style=”font-weight: 400;”>Many firms that provide outsourcing quickly cut the quality of component parts in order to increase their margins. Eventually customers who are accustomed to believing your brand promise begin to notice that your once-great products are suddenly crappy</span>

    • #11566

      Nadia Khan
      Participant
         Does outsourcing enhance efficiency and productivity? Why or why not?

      Outsourcing is when a company contracts a third party to perform specialized work operations, this allows the company to focus on core aspects. Outsourcing increases efficiency by shifting these functions to other companies that specialize in them  which leads to more productivity, efficiency, and is cost effective. This way you don’t go through the stress of hiring an employee and training them, you would be paying the vendor for their help. You’re more efficient by getting expert help without hiring a full time employee. This allows the company to avoid paying for full time salaries, benefits and also expensive software and equipment. This  allows the company to focus their attention on hiring and training facilities within your own core business model, it allows the employees to do what they do best. Therefore, outsourcing does enhance efficiency and productivity.

      https://www.indeed.com/career-advice/career-development/outsourcing-benefits

      https://greaterphoenix.score.org/blog/pros-and-cons-outsourcing-what-you-need-know?gclid=Cj0KCQjwr-SSBhC9ARIsANhzu176qeq33eIyeuqVBTcg3nzyJL7nRnJPNa_KRE1vP2qmWDI6C0HXhDUaAotiEALw_wcB

      • #11574

        Lingjiao Gong
        Participant

         

        <span style=”font-weight: 400;”>One reason it’s cheaper to manufacture abroad is that the companies there are often cutting costs by simply dumping their toxic chemicals. Someday, somebody will get stuck with the clean-up bill; it could be your firm.</span>

      • #11585

        Gabriel Aman
        Participant

        Hey Nadia,  I liked how you stated “You’re more efficient by getting expert help without hiring a full time employee.  Sometimes in any buisness aspect its hard sometimes to even supprot employees with a full time schedule due to the income the buisness is getting overtime or the amount of money not trying to spent into to much employees.

    • #11569

      Syeed Salvant
      Participant

      Outscoring is when one company enlists the services of another company so they take some of the workloads off of themselves and put more effort towards fundamental parts of the organization.  Outscoring leads companies to save on infrastructure and technology companies no longer need to invest in technology and infrastructure because the company that is working with them handles that.  Outscoring also increases the efficiency of a company and leads to better and faster services.  The efficiency of the company increases because a large amount of the workload is taken off the shoulders of the company so they can work on other things at a better pace.  When companies outscore they’re also able to put more focus on who they hire so higher-level workers will be employed.

      https://www.flatworldsolutions.com/articles/benefits-of-outsourcing.php

      • #11579

        Zakaria Ahmed
        Participant

        Outsourcing and offshoring are often used synonymously, however, the terms in fact have two very different meanings and implications. Outsourcing is when a company negotiates a contract with a third party to perform a specific function. When outsourcing a process or operation, it is vital to find a company or person that specializes in the task at hand. However, offshoring is when a company sends in-house jobs to be performed in another country. An example of offshoring is for a United States-based company to produce their goods in Mexico.

      • #11581

        Zilin Wu
        Participant

        Companies sometimes choose to outsource certain functions to reduce risk or transfer regulatory obligations to third-party providers. Given all the benefits of outsourcing, companies often decide to outsource non-core or supporting functions in their business so that they can focus their resources on core competencies and gain a competitive edge in the marketplace.

    • #11571

      Lingjiao Gong
      Participant

      <span style=”font-weight: 400;”>https://www.youtube.com/watch?v=V7fsEIp2r_8</span&gt;

       

      <span style=”font-weight: 400;”>The business case for outsourcing abroad is simple: a lower cost of goods allows your company to make higher profit margins while remaining competitive against other firms. It can also reduce taxes and help you position your firm to expand sales inside the countries where you’re deployed.</span>

      <span style=”font-weight: 400;”>In the parts of the world where outsourcing is cheapest, there is often little or no respect for corporate secrets. Patents are frequently unenforceable, and many companies discover copycat processes and products popping up soon after they’ve deployed there. It can result in low quality, brand-damaging products. “China and India were once prime targets for US, European, and multinational corporations looking to save a buck. Both were valued for their low-cost pools of highly skilled workers. The skilled workers are still there but so is intense competition for their services. And as these workers begin to realize their value, they have also become more demanding. The Economist noted, “Wages in India and China have been going up by 10-20% a year for the past decade.” And compensation for senior Chinese managers “now either matches or exceeds pay in America and Europe.” The loss of intellectual property that ends up strengthening competition – it’s an irony and one more factor for American corporations to consider when deciding whether it’s time to bring foreign production home.</span>

    • #11573

      Zilin Wu
      Participant

      Outsourcing is to concentrate resources, save management costs, and enhance core competitiveness, enterprises entrust their logistics business to professional logistics companies (third-party logistics) operations in the form of contracts. Outsourcing is a long-term, strategic, interpenetrating, mutually beneficial way of entrusting business and contract execution.

      Specifically, outsourcing logistics business can bring the following advantages:

      1. Enterprises can get more professional services, thereby reducing operating costs and improving the service quality.
      2. Solve the problem of limited resources of the enterprise and focus more on the development of the core business.
      3. It can reduce the cost of supervision, and improve efficiency.

      India is the hub of the IT offshore outsourcing market, with at least 80% of global outsourcing allegedly going to India. Other outsourcing destinations are in Asia, Europe, Africa, and South America, including China, the Philippines, Russia, Mexico, Singapore, Ireland, Northern Ireland, Israel, South Africa, Eastern Europe, and Pakistan. The ranking of these countries is vague because each country has its strengths and weaknesses.

      According to McKinsey, India is by far the most favored region for offshoring, largely due to its combined cost and quality advantages. Ireland and Israel can provide good infrastructure and multilingual talent, but at an exorbitant cost. In some countries, factors other than quality and cost are more prominent.

      Reference:

      https://www.mckinsey.com/featured-insights/employment-and-growth/offshoring-is-it-a-win-win-game

       

      • #11584

        Gabriel Aman
        Participant

        Hey Zilin, I liked how you noted each advantges of logistics buisness that help companies  see their perspectives of long term. The way the development side plays aa huge roll to the business first step.

    • #11576

      Kamila Soopy
      Participant

      Outsourcing is the practice of hiring an external group (commonly in developing countries) to perform specific tasks like fulfilling a service or creating goods. At first glance , one may say that the consumer benefits from outsourcing as the product they buy may be cheaper on the immediate purchasing level. But the quality may be compromised for the lowered costs. There are several ways that outsourcing increases efficiency and productivity. They can cut time and costs, as well as find the best available resources on a global scale. Outsourcing may encourage competition by decreasing the barriers into entry of a certain field, therefore allowing it to be accessible to a larger variety of individuals than before. If we refer back to the modules we read about globalization, outsourcing to developing countries results in large production for cheap labor, and though one can say that there are jobs being given, it fosters the question whether the wages are fair.

      • #11578

        Zakaria Ahmed
        Participant

        Basically outsourcing is the external group that should perform tasks to manage the goods. Outsourcing has become increasingly popular with companies as a way to reduce overhead costs and increase profit margins. Outsourcing occurs when a company entrusts a part of their business process to an outside vendor.Offshoring is when production operations are performed in another country. Offshoring is often criticized for transferring jobs to another country but it can be extremely beneficial for companies and can ultimately improve the economies in both countries.

      • #11582

        Zilin Wu
        Participant

        The social impact of outsourcing means its social and cultural consequences. Its main advantage is that it creates jobs for people living in developing economies. Delocalization of products has a dual impact on the political, economic, and social conditions of developing countries. Businesses need to examine aspects of a particular selection area. Opinions differ on whether to move production to developing countries.

    • #11580

      The outsourcing topic I selected is American sentiment on losing jobs to India and the availability of Chinese goods. We want cheap stuff; however, most of it comes from China. Businesses choose to outsource due to cheaper labor and to gain higher revenue on products. Consumers benefit from this by being able to purchase the product at a lower cost. Strategic Outsourcing to maximize efficiency and Productivity. It is an obvious fact that strategic outsourcing helps increase productivity from multiple points of view. Essentially, outsourcing allows workers to emphasize what they excel at tasks that are more significant to them. Outsourcing lowers barriers to entry and increases competition. While increased competition is encouraged by free markets and generally benefits consumers, it can hurt businesses that can’t keep up. Developing countries boosts the rate of economic growth and can lead to improvements in infrastructure and confidence in the economy. Creates Employment. Outsourcing has provided a new arena of employment, especially for developing economies with good standards of English and skills. This helps developing countries compete in the labor market by being able to provide the same quality of service all around. No, Outsourcing can be seen as a poor alternate for almost all of those involved in such an operation. First it tends to deflate wages in all areas involved therefore decreasing the standard of living. Outsourcing effects Americans as their jobs are being outsource for cheaper labor.

       

       

    • #11583

      Gabriel Aman
      Participant

      Does outsourcing enhance efficiency and productivity? Why or why not?

      Outsourcing enhance efficieny and producivity becasue the strategic outsorcing helps increase in the productivity side from multiple point of view. Most of companies usually outsource there non core functions from there business routines. The outsourcing builds up functions that typically take excessively time consumuing, such as planning events or occasion planning. Organization’s can be an outsorce towards their non critical functions. Outsorceing not only enhance efficiency but also cuts down expenses for house working or staffing and preparing. In which lets the comany full time employees have a focus on their crucial core functions.

    • #11722

      Branine Jackson
      Participant

      Does outsourcing enhance efficiency and productivity? Why or why not?

      Outsourcing definitely increases productivity and efficiency by allowing companies to use their resources in a way that best suits the company’s needs. For instance if a retail business outsources its manufacturer, the in house staff can focus on other things like, customer service and marketing. By having one less role to fulfill businesses can increase revenue by simply being more productive.

       

       

      https://www.truppglobal.com/blog/business-process-outsourcing/7-ways-that-outsourcing-helps-reshape-business-efficiency

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