Outsourcing Service From A Supplier

It is a concept that has evolved from a manufacturing perspective to a strategic perspective, which views the concept as a way for organizations to focus and be more competitive. The basic premise of outsourcing is that a specialist organization can perform a particular service more efficiently than can internal operations because a specialist organization has an inherent advantage in producing and delivering a service. Superior technology, management skills, or economies of scale may contribute to this perception. The type of sourcing relationship depends on whether a long-term or short-term need exists. To save funds used for benefits for regular employees, temporary workers are hired. In this case, the organization (outsourcer) provides all necessary resources except the workers, who are provided by the vendor. For long-term services, the vendor has full responsibility for delivering the service; the outsourcer provides only a liaison.

Outsourcing is defined as "the process of purchasing goods and services from outside vendors rather than producing the same goods or providing the same services within the organization." Outsourcing does not come without risks, but it also has its benefits as well. Gaining services or products from outside sources can be very beneficial, considering the alternative that the firm will have to produce them themselves. However, on main risk that is incurred when outsourcing is that when a firm does outsource, they leave the supply of that product or service in the hands of someone of whom they cannot control, contrary to controlling their own supply. Ethical issues are at hand here, as well as trust issues. As you will see in this paper, many different opinions about outsourcing are present among different financial investors and financial officers. Management teams and management leaders are the head personnel that weigh the pro 's and con 's of outsourcing, and this paper will briefly summarize the various opinions, pro 's, con 's, large benefits, and ethical issues dealing with outsourcing.

Outsourcing is the contracting out of an internal business process to a third party organization. The term "outsourcing" became popular in the United States near the turn of the 21st century.(6) Outsourcing is big business today even for small businesses. Like every business decision we are faced with the advantages as well as the disadvantages of relocating part or all of a business. Outsourcing is one of the fastest growing trends in business as large-scale organizations have latched onto outsourcing due to the almost immediate savings and quality improvement. (1)

Though outsourcing offers many potential benefits for product development as it may be used to speed up processes and reduce staffing costs; these benefits are speculated and not always certain. As a result, organizations must not overlook the possibilities of failure due to outsourcing. Because of the inherent nature of outsourcing, vital jobs are extremely distant from central headquarters, and control is essentially being shared and sometimes completely transferred to a third party (Rozet, 2009). Some innovation risks associated with outsourcing product development include loss of confidentiality, possible losses of technological core competencies, loss of managerial control, loss of control of outsourced activities, and hidden costs

     What is Outsourcing? It is a method in which companies subcontract labor and support to outside agencies (Klepper, 1997). How, why, and who companies outsource to are quickly becoming social topics of discussion in our society. Everyone seems to have an opinion on outsourcing. I bet that I can walk into a social gathering right now and hear discussions like “outsourcing is good for the American consumer” or outsourcing takes jobs away from all of the hard working Americans.” In either case, outsourcing has raised great concerns over its effects on the American economy. In this paper, I will discuss the types of outsourcing, pros and cons associated with outsourcing, management views of outsourcing, employee

This paper captures the most prominent services and issues associated with today's outsourcing environment. Outsourcing is the modern business term for having other companies accomplish basic business processes rather than doing them inhouse. While outsourcing has always been an important business option, modern technical capabilities are fast making outsourcing a critical requirement in competitive, cost conscious industries. However, our recent experience with terrorist challenges indicates that a second look is needed to ensure that outsourcing risks are still acceptable.

Outsourcing has been around in some shape or form for many years. The outsourcing today is a fairly recent development however. It has developed off the economic relationship between developed and developing countries. This started around the 1970’s with companies like Dell and Cisco (Leavy 47). Once other companies saw the potential profits to be made from outsourcing, they too began to outsource basic manufacturing overseas (Leavy 47). This began an outsourcing revolution that resulted in today’s current economic situation. Developed countries are labeled as the “Donor Countries” and send certain parts of their manufacturing overseas (Smith 3). Outsourcing has been defined by the Merriam-Webster Dictionary as “To send away (some of a company 's work) to be done by people outside the company.” In a modern economic sense however, people use outsourcing to mean to send work outside of the original country,usually in order to save money, although it has also been done for political reasons among a multitude of other reasons. Most companies outsource low-level manufacturing. When people think of modern day outsourcing, two main examples

Outsourcing is a long-term, result-oriented business relationship with a specialized service provider. Outsourcing is easily defined as the execution of a business process to an external service provider.

Outsourcing is the practice of hiring an external organization to perform some business functions in a country other than the one where the products or services are actually developed or manufactured. Today, 73 % of Fortune 2000 Companies says “ offshoring is an important part of their overall growth strategy.” According to the 2005 Duke University CIBER/

Outsourcing is a long-term, result-oriented business relationship with a specialized service provider. Outsourcing is easily defined as the execution of a business process to an external service provider.

Through my research on the topic of IT outsourcing I have determined that there are many different types of risks associated with the outsourcing of IT functions to a third party company that can equal or exceed the benefits if certain considerations are not taken into account. Risks of outsourcing IT functions can include strategy risks, selection risks, implementation risks and management risks. The outsourcing of IT functions to a 3rd party can be beneficial to a company as it allows that company a means to reduce expenses, focus on its core competencies and free up resources to drive business growth. But ultimately, if the who, what, when, where, why and how are not determined up front and written into a flexible contractual agreement, and the relationship between both parties is not a partnership the venture is destine to fail. Let’s examine in depth the various types of risks associated with the outsourcing of IT functions to a 3rd party vendor.

Chamberland (2003), also points out that outsourcing’s transfer of ownership to the service provider differentiates it from other business relationships. In other business agreements, if an organization still retains its processes, then the organization is purchasing time which is a services relationship. However, if the contracted service provider owns and controls the processes, then the organization is outsourcing. For example, a manufacturing company that hires an outside IT company to help repair and maintain its computer system is not outsourcing. On the other hand, a manufacturing company that transfers some of its business processes to an outside service provider that will provide customer service and Human resource management services back to the company for some years is outsourcing.

Over the last five years the percentage of global Information technology (IT) budgets that have been allocated to IT outsourcing has progressively grown to 23% of total budgets as of the close of the latest calendar year. This continual reliance on IT outsourcing is fueled by not only cost, but also the ability to create new software applications faster, reduce time-to-market by attaining external expertise critical to a new projects quicker, and the ability to keep valuable internal resources focused on the most strategically critical projects (Rosebush, Leavell, Maniam, 2012). IT outsourcing, contrary to widespread public opinion, is not about chasing the lowest cost per labor hour around the world to have programming completed or routine maintenance of applications done (Khan, Niazi, Ahmad, 2011). Best practices in IT outsourcing seek to create a competitive advantage through the alliances with outsourcing partners, while at the same time optimizing overall organizational performance (Ren, Ngai, Cho, 2011). As all outsourcing is inherently filled with risk, any due diligence to create an effective IT outsourcing framework must begin with a thorough definition of risk management guidelines and objectives, followed by the prudent definition of risk trade-offs as captured in the contracts and service level agreements (SLAs) (Wan, Wan, Zhang, 2010). All of these factors must be kept in balance with one another for any enterprise to gain the full

Whether one is running a small business or an established company, outsourcing is one of the paramount ways of attaining professional services at a fraction of the price of hiring a department or a person on a full-term basis. Furthermore, as the business grows, there is no denying that outsourcing becomes a more realistic solution, whether it is a human resource, information technology, or even accounting. Additionally, outsourcing has become popular since it permits business organizations to remain focused on its key competencies while allowing experts to handle theirs. Whatever reason one may have the use for outsourcing, it is almost obvious that one stands to gain in the long run due to the attainment of services at a fraction of the cost (Maon, et al 2010).

Outsourcing is very advantageous. In addition to reducing costs, it also helps firms and companies to improve the efficiency of business operations. The true line between business goals and deliverables in outsourcing. It also can increase productivity and efficiency. Outsourcing provider with expertise and experience can actually help streamline business processes and contribute to the line. Outsourcers can also benefit from third parties to improve the level of service consistently. This will improve the efficiency and can lead to customer satisfaction and lead the company better prepared for the challenges of specialized market.