Advantages and Disadvantages of Outsourcing of Us Product

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Whenever, there is an outsourcing decision, there is an inherent risk associated with it. In addition, in any outsourcing deal, there are some hidden costs, unexpected outcomes, diminishing service levels, to name a few (Antonucci, Lordi, & Tucker, 1998; Aubert, Patry, Rivard, & Smith, 2001; Clark, McCray, & Zmud, 1995; Earl, 1996; King & Malhotra, 2000; Lacity & Hirschheim, 1993).

ADVANTAGES AND DISADVANTAGES OF OUTSOURCING

If Outsourcing has presented itself as a possible solution for you and your company, it is natural to weigh the advantages and disadvantages before embarking on a partnership. Gain insight into the good and bad of outsourcing to help you decide if outsourcing is right for you. Here we break down the possible advantages and disadvantages of outsourcing.

Advantages of Outsourcing

• Outsource your non-core activities and spend more time concentrating on your core business processes.

• Offshoring gives you access to professional, expert and high-quality services.

• Your organization can experience increased efficiency and productivity in non-core business processes.

• You can streamline your business operations.

• Offshore outsourcing can help you save on time, effort, manpower, operating costs and training costs, giving you overall cost advantage.

• Outsourcing can make your organization more flexible to change.

• Experience increased control of your business.

• Save on investing in the latest technology, software and infrastructure and let your outsourcing partner handle the entire infrastructure.

• Get the assurance that your business processes are being carried out efficiently, proficiently and within a fast turnaround time.

• Offshoring can help your organization save on capital expenditures.

• By outsourcing, your company can save on team management problems as your offshore partner will be managing the team who does your work.

• Cater to the new and challenging demands of your customers.

• Free up the cash flow of your company.

• Share your business risks.

• Give your business a competitive advantage - increase productivity in all the areas of your business.

• Outsourcing can help your organization cut its operational costs by 50% if not more.

If you want your organization to stay ahead of competition, concentrate on core competencies and make use of the latest technologies, then outsourcing can help your organization achieve all this and more. The advantages of outsourcing far outweigh the disadvantages. Many organizations across the globe have made the choice to outsource and experience the benefits that it has to offer. More than 500 customers around the globe have and are taking advantage of outsourcing by using the services that Global Outsourcing agency offers.

Disadvantages of outsourcing

The United States has a comparative advantage in industries that require highly skilled labor and capital investment. The highly skilled workforce with a strong knowledge base gives the U.S edge in the global economy. No other country has a high turnover rate of business startups as compared with the U.S. Corporations by shifting some of these jobs overseas to benefit from reduced costs distribute knowledge and facilitate spillovers. Economies such as India or China, receive spillover benefits from influx of knowledge enabling them to advance their economies. A direct result is that competitiveness of U.S technology is placed at risk as its competitive edge advantage is lost from the U.S control. Additionally, the U.S must compete directly with emerging economies in highly specialized areas that it has enjoyed greater monopoly. Aerospace manufactures that now outsource subassemblies are at risk in the long term of creating competitors. These partners now building components may one day build whole jets largely due to technology, trainings and contacts provided by U.S firms. U.S aerospace firms do not have guarantees that their intellectual properties shall be protected.

Manufacturing is vital to a nation, it fosters a strong domestic economy, generates employment sustaining family wages and salaries, resulting in decent standard of living for the working class. Manufacturing firms large and small are bastions of state and local economies, supplying jobs and tax revenues to finance essential public services. Manufacturing creates economic activity spillovers in other sectors that supply intermediate goods and services. It also stimulates creation of numerous high-end job services such engineers and programmers in software technology within local economies. Additionally it drives economic productivity, innovation and engine of overall economic growth.

Manufacturing of semiconductors, the basis of modern electronic devices, prominently add value to the U.S economy proving high-value-added production, high-wage jobs, efficiency and productivity gains, and wage growth. Notwithstanding this, the United States is losing capacity and leadership in production of semiconductors. William J. Spencer (Emeritus of International Sematech chair), summarizes the leadership concerns by suggesting that a blend of market forces and foreign policies is creating powerful incentives to reallocate new chip fabrication overseas. If the trend persists, U.S leadership in chip design and manufacturing will erode with unpleasant consequences. Productivity growth will slump down severely impacting the economy spilling over to military security and might. These warnings have been raised by the National Security Agency and independent institutes.

The semiconductor business demonstrates the problems arising from outsourcing key industrial sectors critical for preservation of critical national security requirements. Natural disasters in South East Asia were chip production is being outsourced; possess a fundamental threat to electronics supply chain. For example the 1999 earthquake measuring 7.6 on the Richter scale that struck Taiwan shut down factories in Hsinchu industrial district disrupting