Advantages, Disadvantages, and Role of Outsourcing in a Global Context

This essay delves into the multifaceted aspects of outsourcing, a prevalent practice in contemporary business environments. It begins by defining outsourcing as the delegation of business processes to third-party organizations, encompassing both service provision and manufacturing. The essay then meticulously examines the advantages of outsourcing, including increased efficiency, cost control, and the potential for increased employment opportunities, citing examples like Apple and Alibaba. Conversely, it addresses the disadvantages, such as heightened confidentiality risks, loss of control, potential for hiring less-skilled personnel, and the possibility of increased costs. The essay further analyzes the global role of outsourcing, highlighting its contributions to employment, budget management for international companies, global market reach, and opportunities for product and service experimentation and research and development. The conclusion synthesizes the discussion, acknowledging the drawbacks while emphasizing that the advantages of outsourcing generally outweigh the disadvantages, making it a crucial strategy for businesses in the globalized world.

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ADVANTAGES- DISADVANTAGES AND ROLE OF OUTSOURCING
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1ADVANTAGES- DISADVANTAGES AND ROLE OF OUTSOURCING
Executive Summary:
Outsourcing is a very common phenomenon in the business world of recent times, and every
other major industry is involved in this practice. This particular practice has both
advantageous and disadvantageous positions. Therefore in the following essay the advantages
and the disadvantages of the outsourcing practice have been discussed and the further the role
of the same at the global perspective has also been analysed. Further, a conclusion has been
drawn from the discussion.

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Introduction:
Outsourcing refers to a business process, whereby, the business house practices the hiring
process by another business house, who act as a third party, in the whole business process.
However, it is not always limited to the hiring process, in certain cases the third organization
also perform services and appropriate goods for the main business houses. Therefore, the
basic notion is that currently, many of the business houses are involving another organization,
as a third party to conduct some of the businesses which are traditionally meant to be done by
the major company (Dolgui & Proth, 2013).
However, in the following essay the advantages and the disadvantages of the system of
Outsourcing will be discussed and further, the role of the same, in a global context, will also
be analysed.
Discussion:
Sourcing has become a common practice of the organizations, especially for the giant
organization and the business houses who have a strong global presence.
Advantages:
The system of outsourcing has been included by the business house because many of the
reasons. Therefore, the prime reasons for the organizations to include this practices are,
Increased Efficiency. The organizations practicing outsourcing have stated that the
employment of the practice of outsourcing in many of the organizational conducts, have been
proved to be beneficial, as it increases the efficiency of the products and the services, and
thus benefit the quality control field of the organizations. The prime reason for this, as found
by the business analysts, is that, as a whole other organization sis employed into
manufacturing or providing other services, are employed into that particular activity only, and

3ADVANTAGES- DISADVANTAGES AND ROLE OF OUTSOURCING
further, the employability and the profit margin of the company being outsourced, is
completely depending upon the major company (Schniederjans et al., 2015). For Example,
Apple is one of the major example that is hugely involved into outsourcing, especially for
manufacturing purpose, which has increased the efficiency of the products.
Cost controlling. This is another major reason for the companies to involve or include
outsourcing. It is often seen, that when the major organization is continuing with the services
then the budget is exceeding to maintain their manufacturing standard. Also, the
organizations have a basic standard of salary structure, which the companies being
outsourced do not have. Therefore, it is easier for the outsourcing companies to get done with
a work at a lower cost, which is not possible by the big business houses (Caruth, Haden &
Caruth, 2013). For example, App Sumo is an organization that exclusively outsources in
order to control the budget.
Increased Employment. It is one of the basic feature of the practice of outsourcing. As the
organizations reach out for outsourcing, therefore, there is an opportunity for another industry
to take place, and when another industry takes place, then, it heighten the probability of an
increased employee base (Dinum, 2015). A great example of this is Alibaba, which has its
employee base all over the world, creating a huge employment base.
Disadvantages:
Though, there are many advantageous positions for the outsourcing industry, but along with
this, there are many points of disadvantages of outsourcing, which are enlisted below.
There is a heightened confidentiality risk with the involvement of a third organization. As a
big industry is including a small third company into its chian, therefore, some of its
information have to be shared with this organization that are essentially confidential and are

4ADVANTAGES- DISADVANTAGES AND ROLE OF OUTSOURCING
to be remained within the organization itself (Dinum, 2015). Therefore, the business analysts
believe that the incorporation of a third party or another organization into the chain, heightens
the probability of the information getting dispersed. This is evidently true for the Amazon,
who has many a times come across Corporate Espionage due to this.
Another major drawback of outsourcing is that, since there is another industry growing up,
therefore, it is often seen that the major company loses its own control from the outsourced
company.
Another drawback of the practice is that many a times it has been observed that people with
minimum knowledge and expertise have been hired which has further affected the
organizational conducts, productivity and the quality of the major organization that is
outsourcing (Somjai, 2017).
Another point of disadvantage as perceived by the business analysts is that, often it is
observed that the outsourcing system has cost the company even more. The basic notion of
outsourcing is, in order to control the cost and cut off the budget, but in certain situations that
the company which is outsourcing has been ended up, paying more or spending more in the
outsourcing business ((Caruth, Haden & Caruth, 2013). As the company is involving a human
resource and another technical or technological resources into the business, therefore, it is
often seen that the company which is availing the outsourcing services, are ending up in
paying or spending more in the company that is outsourced.
Role of Outsourcing at a Global Context:
Outsourcing is practiced globally, that is, across every nations and also, in cases, the
international companies, have outsourcing chains in many of the other countries globally.
Outsourcing, globally has a huge role and contribution. Firstly, outsourcing in a global

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context, provides opportunities for increased employment across nations (Mailk & Lan,
2016).
Secondly, companies who have an international face, is enabled by the practice of
outsourcing to control its budget. For example, the organizations who have a global face and
have their main chin in a developed country, is reaching out to a developing country, and
therefore, they can get the same work done, but at a lower cost. Therefore, it essentially helps
theme to maintain their budget (Mailk & Lan, 2016).
Thirdly, outsourcing helps the companies to have a global reach. With outsourcing practice,
the companies can reach out across nations, and can increase the customer or consumer base,
thus increasing their profit (Mailk & Lan, 2016).
The global presence of the company and the practice of outsourcing also helps the
organizations to experiment with their products and services. As the companies gain a global
face, it is obvious that they will try tom cater to the local customers to that particular nation
or state. Therefore, this gives the organization, the provision to experiment with their
products to lure the local customers. It also helps the organizations to put the Research and
Development field to use more rigorously (Manning, Larsen, & Bharati, 2015). The use of
research and development segment helps the organizations to increase its product base, and
thus to increase its profit base. To exemplify this, the names of Samsung, Amazon and
Alibaba can be mentioned. All these companies have not made themselves a global figure,
but also have contributed in expanding the employee base, the efficiency, and have increased
opportunities in many aspects.
Conclusion:

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Outsourcing is common practice, conducted and performed by almost all of the organizations.
There are certain traditional industries who do not get involved into outsourcing business.
However, outsourcing has become a global phenomenon and all the industries have
dominantly using this business aspect. However, this very practice comes with both
advantages and disadvantages, which have been discussed in the essay, and depending upon
this analysis, it can be concluded that although the particular practice has certain drawbacks,
but the advantageous factors out do the disadvantageous positions.

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