Offshoring And Outsourcing - Essay Example

Offshoring and outsourcing Business operations are today has become very competitive and dynamic and as such issues of whether to outsource or not has been an increasing debate. Outsourcing refers to the way in which firms entrust the processes of their business operations or a given line of operation to a given group of external vendors (Contractor, 2011). Once the operation is outsourced to a given service provider, they will take the responsibility of conducting the operation and maintaining the management assets.

When a company offshores, it just shifts the location of production or a service abroad. Examples of such are companies who outsource to foreign companies - for instance, Wal-Mart offshores production lines of a certain part of Chinese firms. Likewise, offshoring also refers companies who transfer specific lines of production or services to a location abroad without outsourcing the job (Contractor, 2011). These depends on the benefits the company feels accrue in terms of lowered labor cost, Grow global market share, favorable tax conditions, more lenient environmental regulations, proximity to raw materials, lowered import capital cost, and a times the need to avoid national currency fluctuations among other reasons.

Most of the times a company may never handle all aspects of organization’s process internally or times they lack capacities to do so thus the need to outsource. Moreover, some processes are temporary, and the company may not intend to hire in-house experts to perform the tasks. These are some of the considerations including concerns for economic accusation of labor and cost of production generally. For instance, instead of Wal-Mart paying more to acquire labor and raw material in a Specific line of production, they would rather outsource in China and in the long run obtain more gains (Contractor, 2011).

References Top of Form Contractor, F. J. (2011). Global outsourcing and offshoring: An integrated approach to theory and corporate strategy. Cambridge, U.K: Cambridge University Press. Bottom of Form