Essay on Pros and Cons of Outsourcing

993 Words May 24th, 2013 4 Pages
International Business
14 Feb 2013
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) Saving money by cutting operating costs, cheaper labor and lowering the cost associated with training is ultimately
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Time zone factor and holiday schedule, based on countries where outsourcing occurs. In countries overseas they do not observe the same Federal Holidays that are recognized in the United States; so virtually your business will be operational 24 hours per day. The business relationship will be distant which makes it easier to fire and replace staff. Not forming a working relationship with staff makes it easier to fire or relocate an employee. When outsourcing you simply have a contractual relationship rather than a working one. Which is also easier when you have employees that have not been performing to standard.

As I previously stated with every business decision there are pros and cons. Once a company begins to outsource current employees begins feeling threatened wondering if their job is in jeopardy. In some cases employees have left the company in search of new employment. It also causes a decline in morale, productivity and resistance from employees. No one likes to feel as if they can be easily replaced therefore all of these problems should be expected. With the loss of employees companies ultimately loose very competent and knowledgeable employees.
A disadvantage to outsourcing is that you are putting part of your company in someone else's hands. Since the outsourcing provider may work with other customers, they might not give all their time and attention to a single company. When outsourcing you must consider the outsourcing

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