Outsourcing

Name

Institution

Outsourcing

Section A

Introduction

Outsourcing is a business practice that is utilized by companies to condense costs or to improve efficiency by shifting tasks, jobs, activities, operations, or processes to an external third party for a significant time. This has been adopted by most small businesses in the United States as they seek to improve operations and reduce production costs (Akinyemi, 2016). Many organizations have turned to outsourcing as a means of achieving organizational growth but at the same time restricting payroll and other expenses. In this practice, companies are required to discuss their needs and concerns openly. This can be achieved by creating and developing a proper communication channel that facilitates transparency, responsibility, and accountability. It is a situation where two companies enter into a legal contractual agreement involving an exchange of ideas, services, payrolls, as well as expertise. It fuels innovation because companies develop flexible budgets that they can control and manage efficiently. Outsourcing has some good and bad qualities that impact the engineering community and the business industry.

Section B

The Pros of Outsourcing

Outsourcing is a source of cheap labor. The fluctuation of tasks and operations gives the other company a higher bargaining power. As a result, the workers are oppressed and exploited and their payroll reduced. This indicates that companies end up minimizing their labor costs because workers are poorly paid. Cheap labor hinders the production of quality goods and services because the workers are not motivated since their payrolls are poor. This shows that outsourcing can help companies to incur lower costs because labor is cheap and readily available. This exploitation of workers minimizes their input and companies end up lagging behind in terms of growth and development. Outsourcing is believed to reduce and control the operating costs to as it has been a recurring trend amongst U.S. companies. Outsourcing is an incentive that may have a more significant impact for these companies due to the country’s high corporate taxes and directed benefits like OSHA regulations and social security.

Outsourcing has been a prevalent initiative in the United States, and recent studies indicate that it is more efficient and effective (Hoecht & Trott, 2006). The approach has been initiated by a good portion of companies in the higher economy. The results have been assessed, analyzed, and evaluated to identify its significance. Results, however, indicate that outsourcing is more efficient as companies that come to agreement benefit and grow during the course of action. Organizations do not require to hire more employees because they work as contractors. In such a scenario, companies avoid hiring an employee, and this saves more money from employing, benefits to training employees. This shows that outsourcing has a positive impact on the growth and development of a company. Saving money and incurring lower costs helps companies to collect vast revenues that can assist them to achieve various goals and objectives as stipulated in their plan (Hoecht & Trott, 2006). Therefore, it is essential for firms to realize and understand the significance of outsourcing considering their urge to achieve organizational sustainability and development. This could be achieved through outsourcing and companies can increase their level of global competitiveness.

Cons of Outsourcing

The initiative is also accompanied by disadvantages despite being efficient and effective in the business sector. Outsourcing facilitates the creation of more rules and regulations. The parties involved are required to adhere to the terms and conditions of the contract. This enables the development of an environment that workers cannot cope with as they perform tasks (Zirpoli & Becker, 2011). Employee-employer relations are altered, and there exist poor communication channels. This rules and regulations change the organizational structure of the parties involved. Workers are introduced to new regulations that may be harsh for them as they carry out their operations. Therefore, more rules and regulations limit companies to perform specific terms and adhere to the conditions stipulated in the agreement (Chen, & Tseng, 2017). Companies give up some control when they outsource, and they cannot do as they desire because they are bind by a contract. This may slow organizational growth and development because operations are conducted based on some rules and regulations.

Another disadvantage of outsourcing is that it enhances the loss of jobs and no opportunities are created. Outsourcing has led to fewer jobs in America because the program runs on a contract. The workers are not hired by the affiliates, and they are poorly paid. In outsourcing, the third party acts as a contractor, and this indicates that it is not necessary to bring employees into the organization (Akinyemi, 2016). Therefore, employees are uncomfortable, and this affects their productivity and the quality of goods and services. This increases the problems within an organization because the employees may find it difficult to work in unsupportive environments. Fewer jobs facilitate the growth of immorality in the country, and it paves the way for poverty.

There arise the problems with quality because employees are not motivated and goal-oriented. They work in harsh conditions that affect their psychological and physical development. Recent studies indicate that outsourcing is only a good initiative when companies are achieving the quality they expect. This, however, becomes problematic because the organizational culture is altered with and workers fail to adapt to the new organization structure and setting (Zirpoli & Becker, 2011). It limits research and development because the associates are subjected to limited control. As a result, firms fail to become innovative, and the workers are paid to do the same thing. This challenges developmental plans and organizations end up lagging behind in terms of growth and development. In business, it is essential to focus on quality because it instills customer satisfaction and loyalty. Companies fail to achieve sustainability because they undermine the significance of customer satisfaction. Total quality management should be developed to assist companies that outsource attain their objectives and goals. Outsourcing upsets the employees because they feel as if they are being substituted. Thus, they work in fear of being fired, and this affects their overall productivity where they produce goods of low quality. A business venture could fail to succeed in outsourcing if they fail to meet the needs of customers. Quality is a concept that should be emphasized to attract more consumers.

Section C

Outsourcing in the early nineties and before was a foreign concept to many companies and organizations. Most companies built teams ground up to address the various aspects of a business. Later on, this proved to be expensive and inefficient (Akinyemi, 2016). This led to the emergence of firms that specialize in specific ventures such as accounting, consulting, and technology. Companies could not move of their operations to this companies. This was the onset of outsourcing.

Later on, organizations realized they could outsource all aspects of the business without compromising quality and offerings. One reason why outsourcing grew was because of trust. If company A could trust company B to perform specific tasks on its behalf without compromise on confidentiality, integrity, and trust; then company A continued outsourcing that particular aspect to company B.

It is also important to note how important it was and still is for companies to maximize profits, reduce costs, and increase revenues. Companies, therefore, are unable to grow profit due to competition or other reasons resulted in cost-cutting. One of the most effective ways to do this was to outsource different aspects of the business if it resulted in reduced costs and increased revenues.

The author lived during the transition period; that is when most companies were getting into outsourcing their businesses. The author was able to view the issue from different perspectives because he lived in both times; pre-transition, and post-transition period. The author considered outsourcing as a market need – the need to maximize profits and reduce costs at the advent of competition from Asia and Eastern Europe.

Section D

Conclusion

Outsourcing has been a prevalent initiative in the U.S. amid the economic struggles that both small and big businesses face in their operations. The country is familiar with outsourcing and most Americans today understand the concept. Furthermore, companies have gained a better understanding of what it takes to outsource, and the managers have tried to weigh options. This has revolutionized the U.S economy because small businesses have thrived through outsourcing. However, firms should be cautious because there are negative impacts of outsourcing. They should understand the emerging trends especially in a society that is characterized by consumer preference and satisfaction. Companies that have outsourced should focus on improving quality to avoid various organizational challenges like customer complaints. This generation has radicalized the business sector because companies have attempted to adopt new strategies and measures to achieve lower costs, increase revenue, and develop as they seek to achieve organizational sustainability.

References

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