Reflecting Summary Posting - Outsourcing

Reflecting Summary Posting - Outsourcing

Q1 ) Summarize , in your own words , the key learning points from all the discussion that took place

Outsourcing

The use of outsourcing by US companies to significantly reduce operational expenditure is an increasingly growing trend as also noted in the related discussion . Outsourcing is the term associated with giving contracts (e .g IT , Customer Service , Human Resource ) to other service companies so that this outsourcing company itself can focus on its core areas . This generally results in cost saving for the outsourcing company as it is

free to specialize in its core areas with the added benefit of having access to a low cost and highly productive external workforce . This low cost and highly productive service is being provided primarily by Asian countries such as India and China

However , a serious problem does exist and is significantly affecting the US economy : unemployment . Even though US companies may be successful in maintaining high productivity and low costs , they are negatively contributing to the employment in the country . Studies show that increasing outsourcing to foreign companies has led to under utilization of the current American workforce this has placed added burden on the American social security system as more and more families need welfare support . The results of this study are not only reported in the country but also in other countries such as the United Kingdom

Backsourcing Pain

In this discussion , Backsourcing was considered a possible solution to resolve the negative impact of off-shore outsourcing on the economy There is , however , significant criticism of backsourcing because of the belief that backsourcing can cause more damage rather than help these companies and the economy . Critics pin this damage to a number of reasons

Companies will have to pay high costs to set up their logistical and technological systems . They invest heavily in creating programs monitoring /evaluating activity and partially training employees of the off shore companies . Even if this investment is recovered via backsourcing , the same aspects have to be set up again in the core company resulting in double costs . Creating the same set up would also result is wastage of time

The second problem is that of employee retraining companies will try to re-hire previously laid off employees . If they fail to do so , they will need to retrain employees . A more pressing issue will be the added provision (e .g . health insurance ) of benefits to these employees compared to those in off- shore companies . These costs will especially hurt profitability until the transition period of re-training /re-hiring ends till then , these companies will have to maintain both current off-shore operations and launch current backsourcing

RFP Development

Many companies are facing problems in RFP development i .e . creating and maintaining a high end database management system with supporting technology . These problems are occurring primarily because of the fact that these companies are unaware of the requirements of the relevant system

RFP development can initially help a company to provide integral details of the technological system in...