When a company contracts with another company often in a different country to perform some or all of its functions it is called?
Abstract:Outsourcing is a practice to hire a third party to complete work services. Most common ways are hiring outside of country rather than residing country. Show
Full TextOUTSOURCING WORK Have you ever wondered why do businesses outsource, or what does the word “outsource” mean exactly? Well, it’s simpler than what you can imagine. First, “outsourcing” is basically what the word itself implies: out sourcing; that is, receiving “sources” from “out” – outside, that is. To make it clearer, it’s a common practice among some companies to hire a third party overseas or adjacent countries to perform services and create goods that were once achieved in-house by the company’s own staff, but because of X or Y reasons they prefer, or need, external help for the time being. Usually, it happens because of shortage of labor or because of cost-related reasons, but whatever the reason, the goal tends to be the same: to produce high-quality goods through skills the company itself usually finds hard to develop, for one reason or another. A Peek at Outsourcing Ever since Donald Trump came into power, Americans have been calling for him to bring jobs back into the United States, being this one of his presidency’s main components, if not his major promise. However, statistics show that outsourcing is still a major practice among contemporary companies, and there’s no sign that it will stop any time soon. Basically, you could even say that this is why companies outsource: they need extra help not found or as-affordable in their home country. Why Do Businesses Outsource? Outsourcing in business is a truly complex question. Why do companies outsource, exactly? There’s truly not a single reason, but rather several, and it depends on the company’s context and actual needs. Let us remember that outsourcing is when a company hires external help, but the reasons may, and will, vary. Some of the most common motives, however, are the following ones:
When your business begins to grow, it can be difficult juggling everything in-house. Outsourcing allows you the time and resources necessary for focusing on other aspects of the company, while still providing customers with high quality service they expect from their favorite brands. Even with all the pros, a major reason for the practice of outsourcing is to run a successful business model. However, even if a company has enough reasons to run a successful outsourcing program, they must also consider every component to make it work. As many other business-related operations, outsourcing could cost more than what it warrants for, as it has potential risks that the company should be wary of, if not weigh more than the actual advantages, at least according to their specific context. Disadvantages of Outsourcing Companies that use outsourcing must be aware that, while there are many advantages in acquiring external help for their businesses’ operations, the existing disadvantages – and mind you, they’re not few – can be difficult to manage, if not taken care properly. Companies that rely on an outsourcing business must be cautious of the following, should they want to avoid a hopeless downfall:
What Companies Outsource? Outsourcing only became popular until the 90s, when cost saving became a cornerstone in several companies. Outsourced resources, even if required, didn’t necessarily leave a great impact on the business itself, as they were mostly customer service-related jobs that were easily handled over the phone (a practice that still exists, by the way). However, some key industries survived and keep operating until today, mostly because they do offer integral products to big name companies. Some of the most common outsourcing firms offer financial services, pharmaceuticals manufacturing, retail and, of course, IT, technology and software testing, web development services. Some of the biggest examples of companies that outsource are ZS, Synoptek, Fidelity IT Solutions, etc. There are more, but this highlights only the key players inside the company outsourcing venue. Arizona's housing and commercial sector has been booming year-after-year. During these years is when our interior design firm became exposed to performing outsourcing services to local architects, interior designers, and home improvement contractors. Outsourcing on-boarding comes down to 2 areas for us; quick turnaround & reliabilty. Businesses understand the caveat of paying more for an incredible service that they can depend on with minimal stress. How to Perform a Successful Outsourcing Operation In the past, cost reduction was the biggest cause behind outsourcing. Nowadays, however, strategy and value-adding activities inside the company became two of the major drives behind outsourcing practices. If this is the case, though, why do companies outsource to other countries? Basically, companies that outsource don’t hope so much for foreign companies to do the job for them, but rather to have partners to help them grow independently, to put it in some sort of way. Still, and as we highlighted before, this must be done carefully in order to not cause damage to one’s company, or else, it will lose more than otherwise in outsourcing. So basically, for a company outsourcing to be successful, the following are key points to be taken into consideration:
Mind you, all of these are important. However, let’s understand the key components: open communication and leadership support. Communication A good and constant communication, alongside constant executive support, are key players in a successful outsourcing process. This is mostly due to the Service Level Agreement (SLA), as it also involves every individual inside the company staff, which are, obviously, the blood cells in any industry. Communication is important because of the outsourcing arrangement outcome. Be it good or bad, you need to be able to manage the change, and this is only possible through a good communication. Be it for assessing stakeholder requirements or simply keeping your production line running smoothly, having open communication channels during this time is vital. Everyone, no matter how big or small their role is, is vital during this process. Leadership Support Obviously, all strategic objectives must be approved by the company’s top heads. It is the senior management that articulate and define which are the best outsourcing strategies and communicate the goals and benefits to all those involved in the process. Without their approval and support, surely any outsourcing project becomes doomed from the very beginning. Nowadays, top managers recognize big benefits that outsourcing brings to their industries and don’t shy away even after the ink dries in the contract. As a matter of fact, some examples of companies that use outsourcing are some major brands worldwide. For example, Apple’s relationship with China’s Foxconn is rather well-known, and sportswear giant Nike outsources the production of most of its goods to several overseas manufacturing plants, particularly in Asia. These relationships have lasted for a good while, and the success of this is due to good communication and an excellent executive involvement. How A Good Relationship Management Can Save a Failed Outsourcing Lack of certainty and attention has led to many outsourcing contracts to be renegotiated or canceled within just three years, so ongoing management relationship has become vital for this process to survive and become an actual, long-lasting partnership. That’s why the senior management must always remain involved during the implementation of the contract, specially on what could be considered the “last days”; that’s where their involvement shines more than ever.
Aside of a clear procedure, the top leadership of a company must keep the outsourcing relationship alive at all times, be it through meetings, messages… That is, a continuous communication. The outsourcing process must always be placed at the top of these reunions, mostly to ensure it runs smoothly and that every end is met at the end of the day to ensure continuous satisfaction. After all, outsourcing has become an integral part for most successful firms (just remember the after-mentioned companies that outsource), so doing it correctly and following the steps is crucial to surviving and being a successful company. Why do firms outsource project work, or why do US companies outsource jobs? Simply, to complete work, but at the same time, hopefully save money. Which of the following are functions of the World trade Organization quizlet?World Trade Org. - Administers trade agreement and presents a forum for trade negotiations, monitors national trade policies, and provides training for developing countries.
What term describes the situation when an American firm transfers manufacturing and other tasks to companies in countries where labor costs are less expensive?Offshoring is the relocation of a business process from one country to another—typically an operational process, such as manufacturing, or supporting processes, such as accounting. Usually this refers to a company business, although state governments may also employ offshoring.
When the value of a country's imports is more than its exports the country exhibits an?If a country exports a greater value than it imports, it has a trade surplus or positive trade balance, and conversely, if a country imports a greater value than it exports, it has a trade deficit or negative trade balance.
Is the process whereby a firm contracts with other companies often in other countries to do some or all of its functions?Outsourcing is an agreement in which one company hires another company to be responsible for a planned or existing activity that is or could be done internally, and sometimes involves transferring employees and assets from one firm to another.
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