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Essay / Research Paper Abstract
This 8 page paper looks at whether global outsourcing can result in lower coasts and increase the profitability of a company. The paper looks at the theoretical reasons why outsourcing may cut costs and considers the hidden costs. Specific cases are cited and the impact on profits is considered. The bibliography cites 11 sources.
Page Count:
8 pages (~225 words per page)
File: TS14_TEgloout.rtf
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Unformatted sample text from the term paper:
to the hidden functions, such as the making of components and the management of software. These are only a few examples but indicate the scope of the practice. The main
aim of the practice is to increaser the profitability of a firm by decreasing costs. Global outsourcing sees the ability to outsourcer not only to other providers, but those in
different countries, seeking to make the most of the global comparative advantages in order to better the bottom line. The pressure from shareholders to increase earnings and the need
to compete with numerous other firms means that companies are always seeking ways of saving costs or adding value to their operations. Outsourcing may be defined as "A long-term,
results-oriented relationship with an external service provider for activities traditionally performed within the company. Outsourcing usually applies to a complete business process. It implies a degree of managerial control and
risk on the part of the provider" (firmbuilder.com, 2005). This indicates how and why the practice occurs. If the aim is to save money or add value then the
motivation can be seen, however, it is the elements of the supply chain that are often targeted as the areas most able to realise these benefits in a significant manner.
When looking at this we can consider the way that Michael Porter saw the supply chain as able to be transformed into a value chain. This not only shows areas
where there are potentials to save and which may be suitable top outsource, but also areas where the greatest savings of value may be realised. Porter divided this into five
separate sections; inbound logistics, operations, outbound logistics, marketing and sales, and service (Porter, 1985). The model is not specifically aimed at outsourcing, but it is a useful tool for the
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