PICMET 2006 Proceedings, 9-13 July, Istanbul, Turkey (c) 2006 PICMET
Outsourcing SWOT Analysis for Some US Industry
Md B. Sarderl K.J. Rogersi, Edmund Prater2 'Department of Industrial and Manufacturing Systems Engineering, University of Texas at Arlington, Texas - 76019, USA 2Department of Information Systems & Management Science, University of Texas at Arlington, Texas - 76019, USA Abstract--Outsourcing is proven as a good idea for many firms that need to reduce operating costs and improve information technology operations. But it remains important for them to select the appropriate outsourcing activities. Many companies will be hurt by hastily following the herd down the outsourcing path without thoroughly evaluating the benefits
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Too much focus on these areas could take away from what they do best. The same can be said for Company One possible approach to identify areas for outsourcing is, once define capabilities; consider benchmarking your processes to the "best in class." You may find that you want to outsource or you may even determine that you can become an outsourcer. B. Decision To Outsourcing The decision to outsource should be based on two primary factors (After determining it is not a core competency): Will it add value to the customer and will it reduce the costs. If answer is affirmative, it might be a candidate for outsourcing. By outsourcing, Company "A" can add value to their customers by placing more focus on the service they provide. In particular, if Company "C" had to worry about performing their own billing and tax preparations, some aspect of their service might be diminished because of more time spent away from therapy. Also, should a mistake be made in billing or tax preparation because of a lack of know how, the business itself could suffer. Company "B", by outsourcing manufacturing and human resources, is able to focus their resources on the
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Most of the time companies do cost comparison, which is sometime not comprehensive. It is wise for companies to do
After analyzing all these risks and criteria Id like to present some points to demonstrate why we should go for outsourcing:
Because many businesses in the US have more often began outsourcing different business products instead of doing them in-house, it is important to understand why outsourcing may be the best option. Although many tie outsourcing to foreign markets, outsourcing can include both foreign and domestic markets. By entering into a contractual agreement, outsourcing allows organizations to pay for services they need. This gives the option for a business to get professionals to perform services for them that the business may not have the staff for. Outsourcing provides a cost saving-strategy that is usually more affordable. Ultimately,
List and describe at least three factors that a firm should consider when making an outsourcing decision.
Efficiency of a company turns on being able to produce in the shortest amount of time while maintaining quality. Thus, outsourcing allows a company to be efficient where in-house the same task could not be accomplished in a reasonable amount of time.
Outsourcing has become an integral part of many organizations today. Outsourcing has its advantages and disadvantages that organizations will have to weigh to decide whether or not outsourcing is the best possible solution to their current problems and business operations. Outsourcing refers to the process of hiring external provider to operate on a business or organization function (Venture Outsource, 2012). In this case, two organizations or businesses enter a contract where there will be an exchange of services and payments. This paper will discuss the possible risks an organization may encounter in outsourcing in relation to the use of an external service
(Pearlson,2001). Cost is the most important factor when the enterprise make a decision of insourcing or outsourcing. If the company produce the products or service on its own, there are costs more than producing, which can include investments of researching, training, and equipment.The investment of insourcing can be a lot more than the outsourcing because of economies of scale.Outsourcing providers can gain significant savings from economies of scale, which client companies usually can’t get on its own(Pearlson,2001). This benefit could be magnified in IT outsourcing.In the case of Project Harmony, as a food company, Campbell soup was a lack of sufficient scale within their own IS departments and IT technical expertise, so the saving between outsourcing and insourcing was significant.To conclude, cost reducing is the first of core benefits of outsourcing due to economies of
The first and foremost thing to do is to consider before outsourcing is business profitability. Some of the factors to consider regarding this
Summary: The above article talks about how IT outsourcing is the most cost-effective way for companies to hire qualified individuals for specific jobs without having to commit to the significant cost or maintaining a year round in house team. IT outsourcing is
To take on these competitive challenges, corporations are outsourcing to specialized companies that can use their capability to increase the efficiency of an outsourced function (Burt, 2010). Outsourcing has become so common that it is listed as one of the five basic forms of collaboration among supply chain participants (Bowersox, 2010). However, over the past several years there has been a surge of outsourcing taking place in the United States and abroad and this trend has added a new dimension to procurement (Burt, 2010). Today, procurement is used as a competitive weapon that differentiates successful, highly profitable companies from others within the same commerce. (Simchi, Kaminski, Simchi,
The vendors are investing in their employees by various training programs on different technologies. This gives a chance for the vendor to provide the outsourcing services to a company with the help of the well trained employees who are ready to work on the projects. Before outsourcing some of its products and services to a third part vendor, the company has to analyze all the factors that might result from the outsourcing decision, the advantages and disadvantages of the company both in short term and long term due to outsourcing. According to Aubuchon, outsourcing some of its products can be a good thing for a company and the judgment to outsource the services must not only based on the cost factor, but the company has to take all other significant factors into consideration (Aubuchon, 2014).
Office Supply Incorporated (OSI) is a company in crisis, with challenges in its cost structure and poor IT performance. Outsourcing to Technology Infrastructure Solutions (TIS) is an opportunity to both reduce costs and complexity for the firm, but first must consider whether outsourcing is a good strategic fit for OSI. Outsourcing is known as the practice of turning over responsibility of some or all of organizations information systems to a foreign firm in order to stay competitive. Outsourcing is not new to the business world, as it dominated the manufacturing sector the past couple of decades. There are various advantages and disadvantages. Advantages include lower costs, better quality, and downsizing to focus on the
While it lessens the burden on organizations, reducing and shifting the cost and risk of its IT operation, security and management issues to an external service provider or vendor, outsourcing any portions of an organization's Information System has significant risks that can sometimes become detrimental to the outsourced organization. According to the Commission on Government Outsourcing, "when outsourcing an organization exposes itself to significant risks in terms of security, accuracy, and completeness of information (Holroyd City Council, 2008)". Comprised in the rest of this document is an
First advantage of outsourcing is that the organization is in the position to ensure that it is able to complete its activities in a swift and expert manner. Second advantage of outsourcing is that it helps organization to concentrate on core process instead of supporting processes carried out by it. Third advantage of outsourcing is that the organization will be in the position to ensure that it is engaged in activities of risk sharing over a period of time (Carroll, 2007). First disadvantage of outsourcing is that the organization will have risk of exposing confidential data. Second disadvantage of outsourcing is that it can cause some problem to
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
Because of the important relationship between insourcing/outsourcing and competitiveness, organizations must consider many variables when considering an insourcing/outsourcing decision. This may include a detailed examination of a firm’s competency and costs, along with quality, delivery, technology, responsiveness, and continuous improvement requirements. Because of