In recent times, outsourcing has become increasingly accepted. It refers to the act of acquiring a product or service instead of producing it, and can also be seen as transferring or delegating daily business processes to an external service provider. Currently, outsourcing is commonly utilized by all organizations in various ways.
Many IT companies in multiple countries rely on outsourcing for their work, as demonstrated by Dell Computers (Rein gold, 2004). Dell, a multinational firm, currently operates the majority of its troubleshooting call centres in India. This new outsourcing trend creates both advantages and disadvantages. In fact, in 2003, IBM made the decision to move nearly 5,000 programming jobs to India and China (Kriplani & Einhorn, 2003). GE has also expanded its research and development operations overseas.
Major multinational companies, such as Microsoft, Dell, and American Express, engage in the practice of outsourcing. The advantage
...s and disadvantages of this practice can be summarized as follows:
Advantages:
- Outsourcing allows companies to focus on their core business areas.
- It reduces operating costs for multinational firms.
- Outsourcing provides access to a larger pool of workers at affordable prices.
- It grants access to improved expertise at a lower cost.
- Outsourcing enhances the productivity and profitability of a firm.
Disadvantages:
- Managing an outsourcing service provider may present more challenges compared to managing in-house employees.
- If the outsourcing service provider goes bankrupt or ceases operations, the company will need to quickly find a new provider or bring the process back in-house.
- Sometimes, outsourcing can end up being more expensive than anticipated.
- Outsourcing sensitive business processes like payroll may expose confidential information to the service provider.
Furthermore, this trend impacts various professions ranging from IT experts an
accountants to medical transcriptionists and customer service representatives. It also leads to negative consequences such as displacement of older workers and reduced mobility and opportunities for those affected.According to the article "Disadvantages of Outsourcing" (n.d.), although outsourcing may seem beneficial for the American economy, it is crucial to acknowledge that 31% of workers have been left unemployed without any alternative job opportunities. The article highlights that while organizations do experience advantages through outsourcing, there are substantial drawbacks associated with this practice.
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