Effects of Outsourcing - Essay Example

EFFECTS OF OUTSOURCING The use of outsourcing has become commonplace in today's business arena. The basic definition of outsourcing is transferring of service and/or production to an internal or external company. The most popular reason to do this lies in the interest of reducing capital expenditure over a business proceeding. This will downgrade the reliance on internal resources and will give management more time to focus on their business' core competencies. It can be a cost effective method of supplementing an organizations in house capabilities, contributing additional expertise, while allowing them to focus on their mission. (Hira, 2005) The process of outsourcing is continuous and does not have to be an all or nothing deal. It can occur in phases depending on current trends in the industry. The following are a list of the three main types of outsourcing: Total Outsourcing - All operations have been contracted to another provider. This is common in generic, non-strategic businesses like food or janitorial services. Partial Outsourcing- This is when certain activities are kept in house such as customer service while other more specialized activities are sourced out. Plants and telecom offices would typically engage in this type of outsourcing. No Outsourcing- The operations performed day to day are highly unique to an individual business and vital to marketing believability. An example would be a college or university. (Outsourcingsurvival, 2007) While outsourcing operations has its benefits, there are reasons why a business should carefully examine the disadvantages it may present. One is the loss of managerial authority. It is much easier to manage employees in house than it is to manage an outsourced service provider. Outsourcing does not eliminate management responsibilities; it simply changes the nature and level of responsibility. It is also possible to lose sight of day-to-day operations while focusing on coordinating contracts with an outsourced company. Add to that the legal fees that will be incurred for putting together these contracts. The main reason to outsource is to reduce overall costs and any hidden fees may affect a business' bottom line. Another disadvantage that should be taken into consideration are security and confidentiality concerns as they pertain to payroll, salary information, etcGenerally, the amount of money each employee earns is not widespread knowledge. If employee salaries are leaked that could cause some discord within the workplace. When a company insists on outsourcing the process of payroll, they must be very discriminating in their choice of providers. It must be handled only by people who are trustworthy in handling such privileged information. (Softwareprojects, 2007) When operations are handed over to an external party the likelihood of decreased employee morale becomes a greater possibility. Employee talent that has been generated within a business will tend to get discouraged if they are ignored in favor of someone outside of the company. Someone who has worked for a company for a long time can understand certain business issues and will be better equipped to handle them more so than an outsourced party. If they are not called upon to handle business matters that may arise, their growth is stunted and they may feel as if they are not an important entity. Their quality of work may suffer because of this notion or because they rebel against the organization. Either way, this could result in the loss of quality employees which could in turn end up costing the business more financially. (Brown, 2005) The sum total of all of the disadvantages listed above basically boils down to sheer loyalty to the organization. If operations are outsourced to an external group, their devotion is only to those who sign their paycheck. There simply is no familial environment culminated through years of work with a company. This is a very important factor as trust issues are involved and outsourcers must be carefully scrutinized before services are rendered. It is also crucial that internal employees are not overlooked to handle the organization's affairs. If solid employees are lost because of outsourcing, the business will suffer for having to hire and train new ones which may or may not be an asset to the company. (Dove, 1999) A Qualitative method of study differs from the usual quantitative methods (used in the study of pure sciences) in the sense that it tends to be far more subjective. This is in sharp contrast to the methods used in pure sciences which are exclusively objective. The research methods for marketing are a combination of both quantitative and qualitative methods. Being open to qualitative methods of study also allows social scientists to incorporate non-quantitative data (i.e. non-numerical data, such as words, images, gestures, impressions etc.) in their study. Since human beings tend to operate in terms of such data and not in terms of the terminology used in ordinary sciences this broader outlook is far more applicable in the study of social sciences. In keeping with the methodology employed in marketing researches the theories too are formulated and used keeping in mind that they aren't necessarily applicable to all conditions. Be it psychology, history, political science or economics human events are most likely to influence the rules which define the basic theories of a marketing subject. Success in the field of marketing researches can therefore be achieved if and only if it is understood that the subject has no space or opportunity for water-tight methodologies or theories. (Lamb, 2004) It can always be stated that Qualitative research is a process that includes interpretative paradigm under the measures of theoretical assumptions and the entire approach is based on sustainability that is depended on people's experience in terms of communication. It can also be mentioned that the total approach is based on the fact that reality is created on the social formulations. It can also be mentioned that the basic target of qualitative research is instrumented towards social context under normal circumstances where it would be possible to interpret, decode and describe the significances of a phenomenon. The entire process is operational under the parameter of interpretative paradigm that can minimize illusion and share subjectivity under contextualization, authenticity and complexity of the investigation. The basic advantages of qualitative measures are multifold. Firstly, it presents a completely realistic approach that the statistical analysis and numerical data used in research based on quantitative research cannot provide. Another advantage of qualitative measures is that it is more flexible in nature in terms of collected information interpretation, subsequent analysis and data collection. It also presents a holistic point of view of the investigation. Furthermore this approach of research allows the subjects to be comfortable thus be more accurate as research is carried on in accordance to the subject's own terms. The best statistical method would be to interview long well formulated day to day working procedure at a specific and well selected location. Throughout the procedure, it should be noticed whether there are specific variables within the testable population or not. These variables would be extremely important while evaluating the basic data in the final stages where the adjustments would be made to the formulated data in accordance to the observations. However, it is important to completely take into account the aspects of fundamental variables of an individual such as ethnicity, religious belief or positive support from the sales structure of the management and individual. It is necessary to design a new experiment that test the statistical method. For the purpose it is necessary to collect a complete data of the site that would include different religion, ethnicity or gender. The mixed gender of male and female potential customers could well be excluded as that would complicate matters in the context of gender variable juxtaposed with other pre mentioned variables but considering other dependable factors sustaining it would yield to be fruitful in the long run. Data would be collected in relation to the gender, color, religion of the potential customers in respect to the composition of the management under the same parameters. Furthermore, the favorable conditions in the context of experienced customer response would also be accounted. (King, 2006) All these variables are considered as very relevant and important features of the statistical method and it is to be seen if these aspects are fundamentally acceptable in practical world and it could well be mentioned that service are a very relevant manifestation of the social dimensions. As a result if the test is carried out in a proper manner with proper calculations of the population involved then there is no reason that the results would be both logical and true at the end consideration. As descriptions of statistical methods that will be used it could be stated that in order to isolate the results for this particular study, only a survey questionnaire done would have been utilized. These questionnaires would be delivered to potential customers and retailers along with the administrators of different companies. The results were divided into these same categories to ensure validity and reliability. General information in regard to identifiers was utilized in order to ensure that there would be no bias. This information provided the researcher with a more clarified view of perceptions in regard to the possibility and impact. As you can see, the decision to outsource is not one to be taken lightly. So many facets of this process must be taken into consideration before doing so. Outsource facilities must be aware of the strategic mission of your business or they will not engage in activities to promote that mission. Know exactly what needs to be outsourced and what can be taken care of by personnel within the company. Do they offer you more expertise that what you already have in house Finally, you must have a keen understanding of your budget goals and whether or not outsourcing will help you attain those goals or end up costing more in the long run. The big picture of costs and expenses in terms of money, assets, and talent must be taken into consideration before making the leap into outsourcing. If they are not, it could cost you much more over time than simply keeping your operations within your organization. Works Cited Brown, Douglas & Scott, Wilson; (2005);The Black Book of Outsourcing: How to Manage the Changes, Challenges, and Opportunities. New Jersey: Wiley Dove, Rick; (September 1999); Outsourcing Knowledge Work-Why Not; Paradigm Shift International; retrieved on 14.10.2007 from http://www.parshift.com Hira, Ron & Hira A; (2005); Outsourcing America: What's Behind Our National Crisis and How We Can Reclaim American Jobs; New York: AMACOM King, H; (2006); Statistical Principals Today; Auckland: HBT & Brooks Ltd Lamb, D; (2004); Cult to Culture: The Development of Civilization on the Strategic Strata; Wellington: National Book Trust Outsourcingsurvival; (2007); Advantages and Disadvantages to Outsourcing; Outsourcingsurvival.com; retrieved on 14.10.2007 from http://www.outsourcingsurvival.com/OutsourcingAdvantagesandDisadvantages.html Softwareprojects; (2007); Disadvantages of Outsourcing; Softwareprojects.org; retrieved on 14.10.2007 from http://www.softwareprojects.org/disadvantages-outsourcing.htm Read More