The Market Valuation of Outsourcing New Product Development - Research Paper Example

?Whereas we were often led to believe that outsourcing and/or offshoring is a process that hurts the United s economy and by extension the workers within the economy, the reality of the matter is that there are a variety of costs and benefits to these practices. Accordingly, rather than viewing these processes in something of a one dimensional aspect, it will be the purpose of this author to discuss and analyze both the pros and cons of outsourcing as a means of providing a more realistic and nuanced understanding of how this practice impacts the economy as well as the individual shareholder within society. As a function of understanding and appreciating the way in which offshoring and outsourcing can have both positive and negative effects upon the economy as well as the individual worker, it is the hope of this author that and more nuanced appreciation for these practices can be engaged with as a result of the preceding analysis. Naturally, the first and most positive aspect that is often presented with regards to offshoring and outsourcing is with regards to the level of cost savings that can be generated in the particular firm/organization or with the economy as a whole (Bajec & Jakomin, 2011). Furthermore, the cost savings aspect of offshoring is almost invariably the root determinate with regards to why a given business might opt for outsourcing functions in the first place. Similarly, they can gingerly related and if it is with regards the fact that oftentimes the third party service providers excel at the particular services that they provide. This not only means that the entity in question is able to save a significant amount of money by offshoring and/or outsourcing a particular good or service, they are also able to provide a better quality benefit to the end consumer did the fact that they do not have to spend disproportionately large levels of income in order to produce or generate high-quality good or service. Likewise, yet another benefit that outsourcing and/or off-shoring is able to provide us with regards to the issue of capacity management. Whereas in the US economy is oftentimes difficult to react to and meet the changing needs and demands of the consumer market, if a particular good or services off-shored, the responsibility and headache of meeting tight deadlines, hiring additional personnel, and expanding capability in order to meet the needs of contractual partner in question is all placed upon the third party. Many times, these third-party entities are not constrained by the same labor requirements, insurance demands, high costs of shoring employment. Therefore, the firm or entity that is engaging with them is able to realize yet a further level of cost savings with regards to the level of expansions contraction that will necessarily take place during the course of the business process. Naturally, although it can be said that there definitely are benefits to the process of outsourcing, it is undeniable that such a process necessarily robs the system a certain level expertise as well as financial strength. As such the first major drawback which will be discussed is with regards to the impacts of currency outflow with regards to outsourcing and off-shoring. Due to the fact that the money that is sent to a third-party nation and/or worker is outside the US system, it is not able to be utilized in order to provide a net benefit for the workers were citizens (Raasens, 2012). Naturally, as a part of the level of globalization that currently exists, such a factor cannot and should not be understood to be ultimately detrimental. Similarly, one of the most common drawbacks of outsourcing is with regards to the linguistic barriers that it often provides. Although not all outsourcing and off-shoring activities are with regards to call centers, the reality of fact that the broad majority of them are. Accordingly, these call centers are utilized by individuals within the United States who are oftentimes not used to the particular accents or dialects of individuals that they are interacting with on the other side of the line. Although representing a distinct the lower cost, this negative drawback may actually reduce the utility that the service users might gain; ultimately reducing the number of clients and by extension the overall level of profit that a given firm might engage with. Another unique and measurable drawback with regards to outsourcing is with respect to the overall turnover ratio that is oftentimes realized within firms that engage in third-party outsourcing (Wee et al, 2010). Due to the fact that these employees are hired based upon their costs and experience levels alone, the level of employee loyalty and/or longevity is not always treasured. As a function of this, these firms generally realize a very high turnover ratio. In such a manner, the overall quality and professionalism that is displayed oftentimes varies as the time on the job and the overall level of experience of the employee is not guaranteed to the same way that it might be with a domestically trained and employed individual performing the same job. Lastly, and perhaps most importantly is the fact that the high number of outsourced jobs necessarily reflects upon the level of available jobs within the United States economy. Individuals that dismiss such a particular point of view point to the fact that these jobs are low-paying oftentimes unwanted. However, the fact of the matter is that there are many individuals within the United States which actively desire to find appointment and are not simply content to live on government benefits or unemployment. In this way, even a low-paying job would suffice provide them with the living needs and requirements they may have (Whittaker, 2010). As can be seen from the preceding analysis, there are both positive and negative aspects that affect the issues relating to outsourcing and off-shoring. Rather than seeing this as a one-dimensional aspects of the United States current economic system, it must be understood by the reader that both positive and negative determinants are acting the same time. In such a way, the reader can and should come to the understanding that off-shoring and outsourcing are not in and of themselves as ultimately good or evil. Rather, the nuanced affects they have impact upon different sectors and realities of the current economy in different ways. References Bajec, P., & Jakomin, I. (2011). THE NEXT BIG OPPORTUNITY TO BUILD COMPETITIVENESS: INTELLIGENT LOGISTICS OUTSOURCING. Transport Problems: An International Scientific Journal, 6(3), 41-50. Raassens, N., Wuyts, S., & Geyskens, I. (2012). The Market Valuation of Outsourcing New Product Development. Journal Of Marketing Research (JMR), 49(5), 682-695. Wee, H., Peng, S., & Wee, P. P. (2010). Modelling of outsourcing decisions in global supply chains. An empirical study on supplier management performance with different outsourcing strategies. International Journal Of Production Research, 48(7), 2081-2094. doi:10.1080/00207540802644852 Whitaker, J., Mithas, S., & Krishnan, M. S. (2010). Organizational Learning and Capabilities for Onshore and Offshore Business Process Outsourcing. Journal Of Management Information Systems, 27(3), 11-42. Read More