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Paper Topic:

Outsourcing in Todays Economy

Running Head : OUTSOURCING

Outsourcing in Today 's Economy

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Outsourcing is a source of controversary . Is outsourcing beneficial and loyal to the company and its employees or is it a matter of convenience

Introduction

Outsourcing today , is largely practiced by most companies . It is a widespread phenomenon that is deemed effective in most companies and economies . There is no country , no matter the economic condition , that is self-sufficient and cannot reap the benefits of outsourcing . Most countries are heavily involved in outsourcing and examples

include United Kingdom , United States of America , Australia , amongst others The increased level of outsourcing is caused by various developments such as lower foreign costs reduced costs of transaction and improved technology in countries abroad and improved governance in foreign destinations for outsourced activities (Mankiw Swagel , 2005

Definition of Outsourcing

Outsourcing is the act of contracting another company to provide services that might have been carried out by the employees of a particular company , that is , using outside firms and individuals to handle the work of a company . When jobs are contracted to members of another country , it is known as offshore outsourcing . Different types of jobs may be outsourced and examples of these include call-centre services , human resources services , e-mail services , payroll processing services , accounting services , distribution services , etc . These jobs are generally outsourced to companies that specialize in the provision of these services

Reasons for Outsourcing

There are various reasons why companies turn to outsourcing . The most common reason is due to the fact that it helps to reduce costs . Some of the other reasons are

To save enough money in to invest in other areas of the economy or in the business itself

Companies that engage in achieving every set goal and objective by themselves usually have more research , marketing , technology and development costs which they end up passing on to their customers leading to increased prices of goods and services

Employees may not always live up to expectations . Outsourcing major company functions to other organizations ensures continuity and speedy execution of internal business processes

Outsourcing is beneficial to the company that engages in it and is not merely a matter of convenience . There are many benefits to be enjoyed from outsourcing by companies and countries that engage in it . Economies of countries have been known to increase tremendously due to outsourcing . In the United States for instance , after the outsourcing boom , the economy , employment opportunities and salary of workers improved considerably . Benefits of outsourcing related to costs are outlined below

Outsourcing helps to reduce overhead costs of the organization and free up resources of the company

It helps to minimize capital expenditure by reducing investments in high-cost equipment , fixed infrastructure and other expensive projects

Outsourcing encourages the company to focus on more important projects as opposed to engaging in every single functional activity of the company

Outsourcing helps to save the cost of recruiting and training new personnel on the job

Benefits of outsourcing that are...

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