Outsourcing Essay Example | Topics and Well Written Essays - 1000 words

Outsourcing - Essay ExampleMany companies have endlessly hired contractors to support them during peak seasons at dissimilar intervals in the year. There is a vast remnant between sub contracting and outsourcing of a particular exertion. The main variation is with restructuring of the organizational structure when the activity is being outsourced which includes hiring employees at different locations to do the same activity. (1) History The idea of outsourcing began during the industrial revolution where companies took good of the economies of scale to increase their profits by expanding their corporate and manufacturing base. Most of the companies sub contracted well-nigh of the supplemental functions to external dish up providers and this was regarded as the evolution of outsourcing. Outsourcing was not categorized as a strategy by the companies until 1989 when Kodak Company headed by Eastman Kodak decided to outsource information technology as a part of their strategical decision. The companies slowly started focusing more on cost saving and value addition to the business which lead to outsourcing of even core activities which includes data processing, human resources, customer service, legal, logistics, medical transcription, information technology, payroll to companies in different geographical locations in order to increase profits. (1) Although many areas and operations are outsourced, there are some very common outsourced areas- Information Technology Accounts and finance Data processing Security Network and colloquy Human Resources and Administration (3) In support of outsourcing Outsourcing has become an integral part of any organization and has turn out to be a boon to many companies. Many people are against outsourcing as it leads to unemployment in countries similar US and UK but the advantages of outsourcing weighs out its disadvantages. Outsourcing proves to be a mutual benefit for both the outsourced and the outsourcing company in many different ways. There are many reasons why a company may take away to outsource an operation Cost effectiveness One of the main advantages of outsourcing different processes is for better cost efficiency, trim back operational costs as the workers/employees are paid much lesser than the employees of the company outsourcing, for the same business organization performed. The Training and the maintenance costs are also cheaper and inexpensive compared to developed countries. The outsourced partners also provide alter and specific skill sets and knowledge which makes it efficient than the one in developed countries. For the outsourced companies, it does not only concoct better revenue and earnings but also have the time to focus on their unquestionable business which would make them more competitive in the international market. Outsourcing work to developing nations helps in meliorate its infrastructure, employment rates and overall economic welfare. The economy of the devel oping countries will benefit and promote vastly through outsourcing. (2) Flexibility Some operations are seasonal in nature and outsourcing helps to bring in additional temporary resources when needed and released once the work is completed. An outsourcing contract provides flexibility to use the resources according to the demands of the market. The service provider will be able to stabilize and use the resources effectively during the peak and dull season. For example, more data entry processors will be recruited during the peak invoicing season. This