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Discuss The Impact and Pros and Cons of Outsourcing/ Off Shoring

Presented to
Barton, Perry

MGMT 2215

By
Joshua Evins

March 23,2015

There are many pros and cons of outsourcing. Outsourcing and offshoring is a process of
assigning a business process to an external agency of service quality, driving innovation or
benefits of lower labor cost. When being outsourced by the organizations located in other
countries or foreign regions, Outsourcing is the form of off shoring also called offshore
outsourcing. The effects of outsourcing serve the purpose to the industry, which is the same as
undertaken. Industries primary reason for outsourcing is undertaken to enable companies to
generate better revenue to provide better results. The intentions for outsourcing are telling effect
of quality of products and services delivered as a consequence or can lower the quality of the
product. There could be a decrease in the turnaround time when outsourcing it may increase
customer service in the process. Outsourcing provides businesses with a competitive edge it will
result in better management and productivity will be managed better. Outsourcing can provide a
competitive advantage by delegating business process to external agencies and realizing the
benefits of low labor, better quality and better innovations. Manager must cope with the idea of
outsourcing. Most managers need to know there will be shortcomings in the process and the
corresponding impact of the business. Mangers must analyze the opportunities presented its
essential to reflect the advantages and the disadvantages of outsourcing. The pros of outsourcing
reflect positively by enterprises across businesses. There will be more income while outsourcing
and better returns on investments. Lower labor cost is the main objective of outsourcing of an
economic scale. Tapping into a knowledge base for better product. Outsourcing makes space for
management time this will enable businesses to focus on the organization competencies. This
will speed up the company and delivery better quality of service. Also this will reduce cash
outflow and optimizes resources. As a manager you must weigh the advantages and
disadvantages before making a decision on outsourcing. The cons of outsourcing are los of
control over a business process. There can be problems with the quality and turnaround time.
There may be slow response times with slow issues resolution. Shortcoming in performance
should be expected. There can be lower than normal expected realization of benefits and results,
issues pertaining to lingual accent variation and irate customer base couple with enraged
employee unions. Outsourcing is the process of delegating a business process to a third party or
external agencies. The benefits of outsourcing are low labor cost, improved quality to product or
service. Companies in other countries manage outsourcing, outsourcing is formed from
offshoring. Outsourcing and offshoring have an impact on a companys top and bottom line and
have become key components of how successful the business is. The main reason for outsourcing
is low operational and labor cost. When outsourcing is executed correct companies revenue will
increase and savings. Companies may outsource or offshore so they can focus on their core
business processes while delegating processes to external agencies. Outsourcing and offshoring
will enable businesses to think global. Outsourcing and offshoring can free up resources that will
benefit the organization. Outsourcing and offshoring will give access to resources not available
internally. Outsourcing and offshoring is undertaken to save cost and provide capital funds to
businesses that can profit the company. Outsourcing and offshoring will give companies the
chance to wash their hands off functions that are difficult to mange and control while realizing
their benefits. Outsourcing and offshoring can help companies manage risk and also is among the
primary reasons for embarking. Outsourcing and offshoring can enable companies to realize the
benefits of re engineering. Outsourcing and offshoring can help expand business for companies
expand and gain access to new market areas, by taking the point of production. Companies

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undertake outsourcing and offshoring for many different reasons. Outsourcing and offshoring has
become the core component of day-to-day business strategies. Outsourcing is a business process
to give specialist an external service provider. Many organizations can handle the pressure of a
business process internally. Some processes are temporary and the organization does not intend
to hire in-house professionals to perform the tasks. When the company is outsourced to the
service provider, the reasonability of carrying out the tasks and maintaining the organizations
assets. Companies must know the advantages and disadvantages of outsourcing their company
before doing it. Outsourcing may beneficial to your business it also may pose difficulties if not
outsourced to the right service provider. The most common outsourced systems of business are:
IT outsourcing, content development, recruitment, manufacturing, legal outsourcing, web design,
logistics, and technical/ customer support. The key factors of outsourcing are lack of expert labor
in some portions of the business process. Another factor of outsourcing is the availability of
cheaper labor whilst not comprising the quality of output. Another key factor of outsourcing is
the ability and feasibility to concentrate on the other crucial business process. These factors have
specifically contributed to most of outsourced partners across different locations in the world.
The most important advantage of outsourcing to India is expertise in communication capabilities,
technical expertise and favorable financial packages. Outsourcing is most known as offshoring
has its pros and cons. Many times the advantages of outsourcing overshadow the disadvantages
of outsourcing. The advantage of outsourcing would have to be swiftness and expertise. Vendors
will specialize in their field of outsourcing. The vendors will need specific equipment and
technical expertise, most of the time better than the outsourcing organization. The task can be
completed faster with better quality output. The advantage of outsourcing your company must
concentrate on core rather than the supporting ones. Outsourcing the supporting processes give
the organization more time to strength the business core process. The advantage of outsourcing is
rick sharing. Rick sharing is the most important factor too determines if your company needs to
be outsourcing. Outsourcing has components of your business process that helps the organization
to shift certain responsibilities to outsourced vendor. The outsourced vendor is a specialist then
plan risk sharing factors better. The advantages of outsourcing are reduced operational and
recruitment cost. Outsourcing is hiring employees in-house and recruitment and operational
costs. This is the best reason for offshoring outsourcing. The disadvantages of outsourcing are
risk of exposing confidential data. When a company is outsourced so is the organizational HR,
payroll and recruitment services. The disadvantages of outsourcing are synchronizing the
deliverables. When partnering for outsourcing some of the common problem areas including
delivery time frames, sub stranded quality output and inappropriate categorization of
responsibilities. It may be easier to regulate factors inside an organization rather than with an
outsourced partner. The disadvantage of outsourcing is hidden cost and lack of customer focus.
Often times outsourcing is cost effective at times the hidden costs involves signing a contract.
Sometimes companies will lose focus on their organization task. It is important as an
organization to consider the advantage and disadvantage of offshoring before your business
outsourcing.
Outsource is common with business life for many companies moving factories overseas.
Outsourcing is good for companies because there are lower wages and decreased regulation
overseas. This will cut the cost while maintaining good quality and service for their customers.
Every business may not need to outsource their company may not have enough economic
benefit. Other countries labor cost is lower than the United States. This is a key factor why
companies outsource their company. Companies will pay lower wages to outsourced employees

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also there is no unemployment tax, social security and Medicare taxes, workers compensation,
health insurance and other costs for domestic workers. The larger the business the more workers
can be outscored to save cost. Companies will still occur cost needing supervisors and will need
to train the employees. These costs will increase overtime subtracting some over time
eliminating cost from the U.S and foreign wages. Wages for skilled workers overseas are rising
by 15 percent every year. The cost for shipping is cheaper even when the US reduces cost saving.
When companies send their business overseas they should set quality standards for work
performed by foreign employees, language and cultural barriers. Product may not be the same in
overseas factories. The products may be flawed because of out of date or worn equipment in
overseas factories. For example in 2000 a factory in China was making Master locks. They had
to recall 750,000 locks because the locks were pulled apart without a key. Sending companies
overseas can help bring much-needed jobs to impoverished countries. But companies can hurt
companies image by sending jobs overseas when the United States has a high unemployment.
There are fewer regulations overseas this is a reason companies send their business overseas. The
image of companies can be tarnish by sending their company overseas. Some customers are not
happy when companies send businesses overseas. They boycott the companies business that uses
child labor or sweatshops to produce products such as clothing and shoes. Companies like Nike,
Dell and gap have established rules and regulations for their factories overseas. These codes and
regulation will improve company image that use outsourcing. Companies send business overseas
because they cannot find the skill workers they need to make their product or service in the
United States. Outsourcing new product can give your business a jump to the market sooner than
if you had to build your own factories in the United States. India has a high pool of tech workers.
If you have a scarce of workers in the area outsourcing can be your best option to fulfill the jobs
with good skilled workers. Companies outsource their business because of lower cost of their
product and a higher profit margin while begin competitive among other businesses. Outsourcing
businesses also have reduced taxes. Sales may go up in inside countries where you are deployed.
When outsourcing your business you can lose control of your property. Where outsourcing is the
cheapest in the world, there can be less respect for corporate secrets. Patents are frequently
unenforceable and companies discover copycat processes. Factories overseas that produce your
product can result in low quality and brand damaging products. Outsourcing can cause the cut of
quality of the product and increase profit margins. Customer will notice the bad quality and may
stop buying the product. It all depends of the product and the consumer. Outsourcing your
business can result into salve labor and child labor in the overseas factories. This could destroy
your companys reputation. Do you want your business using kids to make your product?
Offshoring your business may create massive environmental degradation. Its cheaper to
outsource business overseas. One reason it is cheaper to outsource companies overseas is
because they dump their toxic chemicals anywhere. When you outsource your company you will
not have access to local markets. The Chinese are known for giving away free trade but having a
regulatory environment that favors local firms. Companies hope when outsourcing their business
they will see new sales. Overseas may have political thugs depending where you outsource your
company. Some countries are communist countries that are run by thugs who suppress their own
people. Do you want your companies named tied to something like that are something you have
to ask yourself before you outsource your company? This can make you vulnerable to energy
spikes. Outsourcing may result in reduce labor. It can also result in increase transpiration cost.
There is always an increase in oil cost. Paying the cost of transportation can result in a
disproportionate impact on your bottom line. Your product may end up killing customers. There

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have been several cases where overseas products coming to the Unite States have killed
customers. There is a slight chance of this happening. Outsourcing your company is helping
destroy your country. Your company is taking job form the United States and giving them away
to other countries. The United States needs job just like other countries. Ask yourself do you
want the rest of the country to become like Detroit. Because that can be where it is heading if
companies keep outsourcing their business. Everyone is outsourcing his or her company.
Everyone is following other companies. This is not creating an advantage for any company. If
companies really want a competitive edge they will figure out other way other than outsourcing.
The cost saving benefits for outsourcing varies and can be misleading. Negative impacts of
outsourcing make themselves known. Time management is difficult to manage while outsourcing
your company. The companys reputation can take a hit. There are many challenges trying to
outsource your company. Even domestic outsourcing can negatively impact your company.
Technology job for overseas countries has increase the number of college students majoring in
high technology has decreased. There has been a 19 percent drop in enrollment for computer
science classes in the mid 2000s. Also there has been a 23 percent drop in computer science
majors due to lack of enrollment opportunities in the country. If this continues to happen there
will be a major blow to employers looking to hire these talents. While outsourcing there are
regulations on confidentiality and intellectual property of American companies. This only applies
to companies that outsource their companies. About 10 present of companies that outsource have
already been faced with violation of confidentiality by organizations to which they had
outsourced. Companies are at risk even domestic companies because these companies outsource
organizations overseas without client permission. Poor post purchase customer service can mean
a loos of revenue as a consumer. A study shows that outsourcing office jobs does result in a
decrease in customer satisfaction. There had been expected to be a problem with language
barriers from offshore companies. The study concluded that customers are loyal to the company
they trust. It does not matter if the company is a domestic provider or based overseas. There can
be hidden cost when outsource your company. Even though there will be a benefit to the bottom
line when outsourcing. Outsourcing jobs mean job eliminating. Which can mean negative effect
on morale, locality and productivity among employees overseas and manage of the business.
There will always be a time difference when outsourcing companies. This can affect business
productivity of employees overseas. Travel expenses can start to pile up for employees who
travel before and forth for training and other job related meetings.
There are pros and cons outsourcing call center jobs overseas. Outsourcing call center is
becoming popular with companies, this slash cost of call center jobs. Companies like apple, de;
capital one to name a few have outsourced call center jobs overseas. Chase bank say they have
no more outsourced their call center jobs because the cost far outweighed the benefits. The
debate is if call center offshore outsourcing is beneficial for business. Deciding if your company
should outsource your business should not be taking lightly. There is a best of both worlds
solution that companies may benefit from. Outsourcing may not be right for your company. Call
center offshoring is defined as obtaining external service outside of the United States. The
outsourced companys takes care of training and hiring for the call center agents. Companys can
outsources a segment of their business like sales, market research and support or outsource the
entire call center it depends on the company. When the call center operations are outsourced the
company leaves the trust to their service provider to handle the operations. Outsourcing call
center jobs can lower costs significantly. Call center job eliminate overhead and outsourcing
reduces labor cost. Outsourcing call center job can eliminate staff issues. External service

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provider will handle the hiring and training and managing the call center agents. This will save
your company time and money. Outsourcing call canter can provide 24/7-customer support at a
good price and your companies wont break the bank. Outsourcing call center can manage
overflow and call volume easier. Outsourcing a part of your call center company can be an
invaluable solution to a costly problem. The more call center agents you have for your business
the better your business. Having more call center agents the better you customer will be assisted.
A con of call center outsourcing is a decreased customer satisfaction. A study at MIT said that
call center offshore results in a decrease in service quality and customer satisfaction. This is
cause of all the factors. Agents lack knowledge from the different countries they will be talking
to. Agents that are from overseas lack good communication skills to provide great customer
service. A con for outsourcing call center jobs are decreased control over business functions.
When sending your business overseas you are putting your company in some strangers hands
that does not really know is the culture of your business. It will be hard to monitor your business
overseas and put your policies in place. There will a lack of company knowledge when you
outsource your company overseas. Outsource call center agents are unfamiliar with company
culture, values and policies. Call center agents may not be dedicated to the company. They may
not care as much as they should or be devoted to the company. This will reflect the company
standard and culture. The focus of the call center agents may be divided. The attention of the
agents may be divided and they may not be devoted to your company. To help overseas call
center agents managers will listen in on calls this is called whisper coach. They will be able to
help improve the agents performance. Managers can also route call to the right agents for the
job task. This guarantee call quality and uptime youll have everything you need to provide
quality service at a good price. New call center software will allow for a simple more cost
effective solution to hiring and manage global call centers. The outsourcing of customer service
jobs predates the current recession. It has been appealing to companies to outsource their
business because of the down cost in time of economic difficulties. There is a negative aspect of
outsourcing customer service jobs. Outsourcing customer service jobs have economic benefits,
as labor is cheaper overseas. Outsourcing customer service may result in cheaper labor cost for
the same job in the Untied States. Pay rates are much lower overseas than the United States. This
can help with cost containment. Training customer service rep can be expensive. This is a reason
companies outsource these types of jobs. There is weeks of training and providing training
materials for new employees and there is a high turn over this can all be avoided when the call
center is outsourced. The cost and materials for customer service rep overseas are responsible for
the agency in the other country. Customer services that are open 24/7 in the United States are
costly. The pay will increase for employees working later shifts. When the customer service job
is outsourced globally employees are available around the clock. Outsourcing call center jobs
locally can help gain space for other essential workforce. Having overseas call centers can help
bilingual customer in the United States. A lot of call center jobs are outsourced to Mexico. This
will give Spanish-speaking residents in the United States with service rep who speak their
language. A negative aspect of outsourcing is a loss of control over an important are of the
company. Customer service is usually the first business between the customer and company with
a problem. If call center rep are not trained to proper levels customer will not be happy with the
service. Language difficulties and poor connection happen when companies outsource call center
jobs. American workers experience job losses due to outsourcing even though American may be
a more educated then overseas worker. It is difficult to handle security of data and finical
information overseas. Outsourcing your company is a very tough decision. That should be drawn

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out and not taking lightly. Before outsourcing your company there should be a lot of research,
weigh the pros and cons and think about the long term of the business. An alternative to
outsourcing call center jobs is enlisting help of an answering service that is based in the United
States. Employees should be trained professionally so that they can offer customer excellent
support on a budget.
There are pros and cons to outsourcing manufacturing jobs. Outsourcing manufacturing
job has a negative connotation with it can damage companies reputation. There can be significant
benefits to outsourcing manufacturing jobs. But there may be bad publicity to your company.
There also will be major cost moving your company overseas. Companies should compare cost
and benefits of outsourcing their business. This will help you determine if this is right your
company. Where you outsource your manufacturing job can cut the cost, this includes a saving
on hourly wages, payroll and benefits. Laws are less stringent with oversea jobs, this always you
to have longer hours or add shifts without increasing pay. Outsource manufacturing job may also
be able reduce pay by pieces produced. There are no unions in many foreign countries so there is
less likely for theyre to be strikes, negotiations and differently in terminating poorly performing
workers. Outside businesses outside the United States have fewer regulations regarding labor
conditions, disposal of materials; right to work laws and the cost of producing goods in more
developed countries. Factories overseas cost less than factories in the United States. Companies
save money by outsourcing their factories overseas, this will also reduce the cost of real estate,
property taxes, maintenance, insurance, security, utilities and operating and overhead cost. These
saving may be enough to outsource you manufacturing job even if you do not reduce your labor
cost. Outsourcing can lower labor, operating and overhead cost while maintaining or lowering
your current price levels. This can cause an increase in sales and help improve your market share
for your competitors. The lower your price points for your business there will be an increase in
profit margins. Outsourcing manufacturing jobs can reduce your expenses if your sales stay the
same. You will have extra money to spend on marketing, debt reduction, research and
development, headquarters salaries and any other areas that may need improvement for your
bottom line. When outsourcing your manufacturing jobs the quality of the product may reduce.
When considering business outsourcing for manufacturing jobs how will you oversee and
regulate the production process in a different location. You may be able to pay one of your own
employees who can oversee the business. It may take a while to find an inferior product when an
outsourced item is produced. This is based on how long it takes to get to the consumer. There is a
stigma in the eyes of the consumer about outsourcing manufacturing jobs. Many American
depend on these jobs. Consumer may resent companies taking jobs away from their community
and sending good paying jobs overseas just to make a profit. Working conditions overseas are
worse than the United States for manufacturing jobs. Outsourced manufacturing jobs are sent
overseas to overpaid workers or to work in dangerous working conditions. Many countries do
not care about the work conditions they allow this to happen. They allow the outsourced
company to pollute the environment. When Americans find out the conditions these companies
put these workers in consumer groups often publicize this information and boycott the company.
Outsourcing manufacturing job gives companies reduce cost but can affect the domestic
economy. Labor cost in the United States is much higher than other counties. The cost of
production will be reduced if companies outsource their business overseas. In recent years the
cost of shipping goods has went down. Tariffs in North American Free Trade imports have
dropped and other international efforts to promote free trade. Outsourcing manufacturing jobs
overseas can promote capitalism and free enterprises in many areas have histories of communism

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and totalitarianism. The increase in economic interdependence with the United States these
overseas countries are likely to develop into democracies and likely to establish a middle class of
their own. When jobs are moved overseas People in the United States are out of work. This is the
biggest downside to outsourcing jobs. For worker finding a new job is hard to find.
Manufacturing jobs pay a better wage than many service jobs. Some employees find it hard to
job a good job that pays the same as a manufacturing job. Outsourcing manufacturing job is a
low cost goods. This will reduce the cost for consumers. Lower cost make it possible for
consumer to afford the products and able to afford the products in larger quantities. This helps
consumers improve their standard of living from the lower cost of the goods.
When companies are offshored to India, China, Russia or any foreign country the
manager need to know how to staff the operation. Offshore staffing is difficult but has to be
done. The highest quality of staff must be found when offshoring your company. Managers need
to know to find the best worker for there overseas company. The recruitment falls with the third
party, which mean suppliers who can be trusted to find the right staff. Having clear set goals for
the outsourcing market is the first step. Outsourcing is defined by process where an ender user
engages the services of outsourcing supplier to conduct different business processes. This is
anything that has to do with the business such marketing to cleaning or IT. Outsourcing has been
a part of business for as long as bossiness has been conducted for companies. Companies form
partnership when they outsource their company overseas. Offshoring is the headline grabbing
process. In the last couple of years outsourcing has become popular and widely accepted and
recognized business practice. There is a mix between successful outsourcing businesses and
disasters. Companies have to learn from their mistake to better the business. Make improvement
to conduct better standard of the offshoring business. Offshoring is not for every company.
Careful consideration should be taking to companies thinking about outsourcing. Some
organizations are not suitable for outsourcing. Staffing and other obstacles may cause companies
not to choose to outsource their business. Offshoring may cause more harm then good for some
companies. Companies need to look at the benefits and balance those against the negatives.
Offshoring is becoming more popular a wider array of companies is considering it an option.
Company culture may be a problem for some businesses that outsource their company. When
outsource employees will simply not have the level of skill required to complete the necessary
task. Offshoring is not the answer to every problem in many cases it is beneficial. Companies
need to access the skills that will result from outsourcing agreements. It is crucial to the
companys success that employees are trained property. When choosing for your company to be
outsourced suppliers must have the knowledge that gives the company a competitive edge.
Outsourcing relationship has been broke down because suppliers have not been able to offer the
skills necessary for the organization. Questions have been bought up about security issues related
to intellectual property. Offshoring is increasing in popularity for many reasons. Organizations
try to get their call center jobs done in a much cheaper location may look to offshoring as the
answer to reduce cost. The advance in technology is helping improve the outsourcing of the
company. It has become easier to outsource companies. Cost is the only reason employers
outsource their company. Many businesses offshoring as a way to heal the skill gap that will
become a greater and greater problem in the UK as population. Offshoring is a vital part of the
rising of globalization. Many rising countries could only depend in global agricultural markets.
This is having a real impact on the rising countries economy by providing services like IT.
Accounting, manufacturing and call center jobs. India has recently had a big economic growth
because of offshoring this is an essential factor. The UK is starting to worry that the rising

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countries will help to detriment of Europeans countries. This should not be the case. These
European countries will be using these outsourced locations to have lower level work done. The
higher level work will remaining in the onshore operations. This will help the company in
revenue, which will be brought back to the home nation. Globalization will have a good impact
on these countries if done correctly, every country will benefit this mean more jobs for everyone.
Companies do not outsource their business just for the economic benefit. It has been proven that
globalization and offshoring is instrumental when ironing out political difficulties. India is a
perfect example. Pakistan and India were about to have a nuclear war until recently. In this
circumstance Western companies did not cite political instability as the reason for outsourcing.
Many businesses have frozen outsourcing plan when there is political tension. This has been
significant when it comes to the decision to the peace process. India is head of the offshoring
game but countries are not far behind. China is growing at a rapid rate. Philippines are also close
and many other countries are trying to get in the business. From Egypt to Brazil, South Africa
many countries are trying to set up their infrastructures and skills set to see what services they
are able to offer. These have high graduation numbers and good language skills. This is a key
factor for outsourcing. Outsourcing does not mean sending business overseas to some far
location. Companies tend to favor local companies when it comes to outsourcing as a business
process. Most businesses are happy with their outsourced service but offshoring receive a lot of
bad press. There have been a lot of bad stories about offshoring. Stories have come up about
fraud and bad service about offshore businesses. Some companies have made a stance not to
outsource their company. Although there are many benefits of onshore outsourcing. Whether on
shore or offshore there will be pitfalls.

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http://www.flatworldsoultion.com/pros-cons-outsourcing, The Pros and cons of
Outsourcing
http://smallbusiness.chron.com/pros-cons-outsourcing, The Pros & Cons of Outsourcing
to Offshore Companies
http://blog.livehelpnow.net/the-pros-and-cons-of-outsourcing-customer-service, The Pros
and cons of Outsourcing Customer Service