Paper Topic:

Outsourcing

The Source of Outsourcing

Name

School Outsourcing is the latest trend in the business world today . It involves the strategic use of outside resources to perform activities traditionally handled by internal staff and resources (as cited in Handfield , 2006 . Many corporations are lured by the idea of outsourcing since it promises cheap labor and lower production costs . Despite its obvious benefits , however , there are still sectors in society (primarily from the negative end of outsourcing ) who are opposed to the practice of outsourcing . The reasons for these will be discussed

in the succeeding sections of this

The Source of it All

The 1980s gave birth to the idea of outsourcing . It began with the Industrial Revolution wherein companies started the exploration for new ways to maximize profit . The ideal company then was one that can own manage , and directly control (as cited in Hanfield , 2006 ) its assets During the 1950s and 1960s , diversification became the way to go Diversification meant that companies could protect their profits despite the multiple layers of management needed for expansion . In the 1970s and 1980s , however , the corporations ' desire to compete globally was hindered by the bloated management structures (Handfield , 2006 ) that resulted from diversification . The bloated structures simply allowed little room for flexibility thus limiting global expansion . Because of this , companies started to develop new strategies that required them to focus on their core business , [identify] critical processes and [decide] which could be outsourced (Handfield , 2006

Outsourcing , nevertheless , was only identified as a formal business strategy in 1989 (Handfield , 2006 . Since then , outsourcing has undergone four stages of development

During its earliest stage , outsourcing became a means for companies to compensate for the functions for which they had no internal competencies . Corporations , for instance , hired couriers from another mailing company to deliver corporation letters and packages . At its second stage of development , outsourcing was utilized for support services . This stage was most evident uring the 1990s when the corporations ' focus was on producing more cost-saving measures . As such corporations made use of outsourcing to search for workers who can provide them with the functions necessary to run the company but not related specifically to the core business (Handsfield , 2006 . The emergence of service companies (accounting , human resources , data processing , security , plant maintenance ) during this time aided this particular development of outsourcing , as companies would ask these companies to do their housekeeping . Later on , outsourcing moved to another level as managers sought to improve their companies ' finances with the use of outsourcing to affect cost savings in key functions (Handfield , 2006

At present , the idea of outsourcing is intertwined with the idea of strategic partnerships . Eastman Kodak started this particular stage in the development of outsourcing when they decided to outsource their information technology system , which is one of the main components of the corporation . Such a move was considered revolutionary during the 20th century and was quickly emulated by other major corporations . This move brought about a crucial realization : owning the technology is...

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