Wednesday, September 19, 2012

Outsourcing on the Rise

          The main objective of this article is to present the significance of outsourcing and how it is becoming the norm for major corporations. The main goal of outsourcing is to reduce costs while also adding more flexibility and specialized skills. Companies are trying to “have their cake and eat it too.”  Through outsourcing companies are able to successfully have the best of both worlds.
         After reading this article I feel that there are advantages and disadvantages to outsourcing in the short and long term. One major advantage is that outsourcing saves time. Outsourcing saves time in the sense that the time it takes for an employee to learn how to develop a new solution and execute on it can take a long time. That time could be spent on something they are stronger at doing. For instance one might be better at marketing, accounting or financing or a particular technology if we are talking information technology. Instead of dedicating their time to something they are unfamiliar with, they can get a subject matter expert (S.M.E.) provided by an outsourcing vendor to do it. The company mindShift Technologies performs this successfully. Robert F. Spicey Jr. Chief Executive Officer of mindShift Technologies says “their motto is to do what you do best and outsource the rest”.  This way the tasks can be done quickly and effectively.
         The second advantage is it allows a company to grow and scale at will, because you can add staff on an as needed basis rather than having employees sitting idle waiting for the next wave of work.  This ability to quickly expand and contract your resource pool is attractive to business owners. It also enables you to add unique functionality that you might not ordinarily have on staff.
         The third advantage is the ability to have employees focus on more strategic projects, while outsourcing more tactical jobs. Even though the stigma that goes along with outsourcing is that companies who outsource also lay-off more employees. The truth is actually quite opposite. Employees are now able to work on more interesting projects that have a higher employee satisfaction rating. By outsourcing the less interesting, robotic functions often increases employee morale.
         McDougall states that outsourcing could become a problem for companies who may outsource too much, meaning that they can become more dependent on outside IT resources and may no longer be a prime innovator themselves. The intellectual capital needs to remain with the company, not the outsourcing partner. 
        Overall, I feel that outsourcing is a strategic way for a company to be successful in reducing costs and increasing their labor pool of resources and provides great flexibility. Even though there are both negative and positive consequences to outsourcing, I feel that in the long run a company can benefit significantly from outsourcing.


Information Week "Outsourcery" By: Paul McDougall p.19-23

IT Outsourcing and Cloud Services by mindSHIFT Technologies, Inc.



1 comment:

  1. Outsourcing is a great way for companies to save money while still having all positions filled. If a company outsources operators they no longer have to pay the Americans that did that job minimum wage. Instead they pay someone overseas. In china some workers get paid as little as sixty cents and hour. That is a big difference from the seven to eight dollar minimum wage in the US. Cutting these costs can free up money for a company to use elsewhere. Furthermore, It is cheaper to own an office building or factory overseas than in the United States. If something happens in the country such as war it is cheap to move the factory to a new country. Outsourcing also allows companies to hire people for short periods from low costs. Companies such as Toys R Us may hire more people during the holidays to cover the extra incoming calls.
    Though the benefits of outsourcing are good there are some costs. When a company outsources jobs they get bad publicity in the United States, which is the biggest market for many companies. When Americans lose their jobs over outsourcing they get frustrated and may not buy products from that company anymore. Furthermore, if there is a war in a country where a company has an office then they may lose all of the documents that were stored in that country. This could include many customer records. Another problem with outsourcing is that many companies lose control when jobs are shipped overseas. There aren’t any company executives in China making sure that everything is running smoothly. They must trust the people there to do their jobs. Outsourcing can also sacrifice a company’s product quality. If the new workers don’t know what they are doing then they may not be able to make something as well as the Americans that had been making it for years.
    From a business prospective, outsourcing can be a very good thing. It can cut expenses for a company. On the other hand it may lose the loyalty of customers.