Outsourcing is the practice in which businesses engage in hiring parties outside the company to do services and creation of goods that would otherwise be performed by the employees of the same company. This practice is normally taken by many companies as a measure of cutting down on the operation costs. This paper will aim at expounding more on the advantages and disadvantages of outsourcing work globally, the paper will do that by providing at least two examples of companies that have successfully embraced the use of supply chain globalization.
To start with, outsourcing has so many significances to any business that applies the method, the first is cost advantages, this is the most obvious benefit of this method because most companies get their jobs done at a very lower cost and at higher qualities. As a result of the differences in wages paid to employees in America and Asia, companies can have the same kinds of work in America being done in Asian countries at a fraction cost compared to parent countries therefore saving at least sixty percent of the operation cost through outsourcing their work from Asia. That is assured of because the quality of work produced is higher. The second advantage is increased efficiency, this is because when a business outsources its workers using outsourcing partners, the partners make sure they bring in the company the best experiences in business practice to the deliverance of different outsourced projects. By doing so, jobs can be done using better knowledge of the available domain, in turn leading to increased productivity.
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Another benefit of outsourcing is focus on core sections of the company, this is because when a company outsources business processes it will get free energy and therefore get more time on building on their brand and also invest on research so as to provide higher added services. Companies also have access to skilled resources when they employ the use of outsourcing, this is because outsourcing providers like Flatworld take care of outsourcing needs of a company with the provision of high quality personnel9Dinu, 2015). Companies therefore would no longer have to invest in the training of expensive resources as resources employed by the providers are well versed in respective business. Companies who employ outsourcing also have time zone advantage compared to companies who do not use it, this benefit comes out as a result of differences in time zones between the parent country and the country being outsourced from. Jobs may get done when the company in America is getting closed off for the day, but the next they when they wake up services are delivered, this unique advantage makes companies to have round-the-clock operations.
The method also has its own disadvantages, first, when companies employ this method, they tend to lose some control, this is because when a business outsources experts, it loses some control of how tasks are run, being monitored and at the same time performance of the operations (Nielsen, 2015). Most of the times business may be exposed to security risks, when outsourcing processes use personal data, the privacy of any company may be put at risk through the passing of data to the third party. Another disadvantage of outsourcing is the shift in time zones where it sometimes becomes difficult to make schedules to accommodate this difference and ensuring that customers receive promised services at the convenient time.
To conclude, there are companies that have successfully embraced the use of supply chain globalization, Secex, a company that mainly focuses on mining, has its operations in more than two continents has successfully employed globalization in its operations (Fernandes, 2017). Honeywell international is also another successful company that has employed the use of global supply chain, they have done so through the addressing of tough challenges that globalization has brought to the business world.
References
Dinu, A. M. (2015). The risks and benefits of outsourcing. Knowledge Horizons. Economics , 7 (2), 103.
Nielsen, L. B., Mitchell, F., & Nørreklit, H. (2015, March). Management Accounting and Decision Making: Two Case Studies of Outsourcing. Accounting Forum (Vol. 39, No. 1, pp. 66-82). Taylor & Francis.
Fernandes, R. Q. K., Cavalcanti, V., & de Andrade, A. M. (2017). Design Management in the Toy Industry: Case Studies on Design Insertion for the Development Process in Brazilian toy companies. Strategic Design Research Journal , 10 (3), 230-240.
