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Is there evidence to support that the benefits of outsourcing and/or off-shore outsourcing outweigh the disadvantages - Essay Example

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Is there evidence to support that the benefits of outsourcing and/or off-shore outsourcing outweigh the disadvantages Abstract Globalization and complexities in the trade relations have urged multinational companies to outsource their services to other countries where the cost incurred for development of the processes is far below the profit margins…
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Is there evidence to support that the benefits of outsourcing and/or off-shore outsourcing outweigh the disadvantages
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Extract of sample "Is there evidence to support that the benefits of outsourcing and/or off-shore outsourcing outweigh the disadvantages"

Download file to see previous pages Theoretical and empirical evidences are given for validating the hypothesis. 1. Introduction Diversity in trade relations with globalization has introduced various new business processes among which outsourcing is one of the most common term. Generally, outsourcing can be regarded as the “transfer of an internal service function to an outside vendor” (Benaud & Bordeianu, 1998, p.3). Developed countries like United States of America, Great Britain are randomly using outsourcing techniques for reaping profits. Now in this respect the notion of offshore outsourcing also holds a significant importance. The process of offshore outsourcing generally refers to practice of outsourcing to the vendors in the foreign countries for extracting the advantage of wage arbitrage. The companies who engage in offshore outsourcing engage “the foreign suppliers to perform some or all business functions in a country other than the one where the product or service will be sold or consumed” (Ramanathan, 2009, p.16). China is a country which has developed itself as the hub of manufacturing offshore. Developing countries like India in recent times can be regarded as a nucleus of technology enabled services. ...
As for example one of the disadvantages of offshore outsourcing is that the outsourcing organizations become highly dependent on the external service providers (Ramanathan, 2009). There are other disadvantages associated with offshore outsourcing which will be discussed within the course of the paper. Thus as the topic directs the paper will be highlighting on the fact that whether strong empirical evidences are present which can support the statement that advantages of outsourcing and offshore outsourcing surpass its disadvantages and other bottlenecks (Ramanathan, 2009, p.16). 2. An insight into the pros and cons of outsourcing - a literature back with respect to outsourcing model Before making a proper assessment of whether the benefits of outsourcing outweigh its disadvantages, a proper study on the potential advantages and disadvantages of outsourcing and offshore outsourcing needs to be figured out in a proper manner. 2.1 Rationale for outsourcing With the increase in global competition and transforming business dynamics, the mechanics of outsourcing has changed a lot (Wee et al, 2010, p.2081). Before 1980s the functions of outsourcing, its processes and activities were normally executed within the firms. This was done through the process of outsourcing contracts operated within the firm along with the outsourcing contracts through the repurchase through supply contracts. But after 1980s with the use of outside suppliers within the global business milieu and the Third World countries immense thirst for development gave the multinational companies (MNCs) lucrative opportunities within the trajectory of offshore outsourcing. The MNCs have established local companies that are capable of producing at a very low cost and at ...Download file to see next pagesRead More
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