Global Economy
Outsourcing can be seen in many industries today; however for the purpose of this paper outsourcing refer to the technology industry. “Globalization is the strategy of pursuing opportunities anywhere within the world.” (Pearce, Robinson, p. 123). Now globalization is not outsourcing; however it is important because companies small, midsize and large outsource to people of different cultural, languages and backgrounds globally. Outsourcing is the contracting out of a business process to a third-party. Another meaning I found to describe outsourcing was “outsourcing is the practice of hiring functional experts to handle business units that are outside of your firm’s core business” In the text material “Strategic Management” outsourcing is a basic approach to strategic alliances that enable firms to gain a competitive advantage. (Pearce, Robinson, p. 225). Is outsourcing here to stay?
In a video” Outsourcing: Don’t Default to Cost Reduction but to Getting the Most out of Your People” speaker Bob Chapman discusses how we can achieve cost reduction by finding the cheapest amount of work to be done for less money. According to (Dominguez, L. (2006) “Using outsourcing as a business strategy is not new” although it is in more demand today. Factors leading to outsourcing include:
Reducing labor cost
Improved productivity
Balancing competitive pressure
To fill a business need
Gain access to world-class capabilities
Create a global market for your product or service
There are many more reasons that lead a business to outsourcing such as global “economy. Now companies are looking to cut cost so what “might take $25 per hour in the U.S. to build it might only cost $1