HI5013 Assessment 1: Outsourcing in a Global Context Report

This report examines the concept of outsourcing, its advantages, and disadvantages, and its crucial role in the global business landscape. It defines outsourcing as the external procurement of services and products, highlighting benefits like access to specialized expertise, cost reduction, and risk mitigation, while also addressing potential drawbacks such as the risk of exposing confidential information and the complexities of managing outsourced relationships. The report emphasizes outsourcing's significance in a global context, particularly within supply chain management and logistics, where companies focus on core competencies. A case study of Mukwano Industries Uganda Ltd. is presented, illustrating the complexities and potential challenges of outsourcing freight forwarding services, and the importance of strategic planning and skilled management. The report concludes that thorough research and provider audits are essential for successful outsourcing strategies, ensuring competitive advantages in the globalized era.

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Table of Contents
Introduction................................................................................................................................2
Discussion..................................................................................................................................2
Outsourcing............................................................................................................................2
Advantages of Outsourcing....................................................................................................2
Disadvantages of Outsourcing...............................................................................................3
Role played by Outsourcing in Global Context.....................................................................4
Conclusion..................................................................................................................................5
Reference....................................................................................................................................7

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Introduction
In the recent few years, the outsourcing has now become the vital factor in the
performance of the organizations and no longer can it be ignored. In the era of Industrial
revolution, the organizations have been very much concerned about exploitations of their
competitive advantages for increasing their profits as well as markets. However, there are
certain issues in the management of the functions of outsourcing as well as the role played by
it in the revolutionizing increase in the performance of the organizations. The services of
outsourcing ranges from logistics to cleaning to others which has now become the significant
forces in the services of global outsourcing trend, yet there are number of questions regarding
degree to which there is positive outcome of outsourcing and condition that supports it (Khan
and Bashar 2016). Therefore, under this report, discussion will be done on the advantages as
well as disadvantages of the outsourcing as well as role it plays in the global context.
Discussion
Outsourcing
Outsourcing is described as the procurement of the products or the services from the
sources, which are external to organization. It is defined as the act of transferring of the some
of the recurring internal activities of the organization and the decisions rights to the outside
providers as set in the contract. It generally involves having the work that was done formerly
inside, which is to be performed by the external organizations. The provider of the services is
generally responsible to deliver the service that is contracted, resolving the problems of day-
to-day operations as well as helps in managing request and implementing the routine changes
according to the frameworks of the contracts as well as standards (Gunasekaran et al. 2015).
Advantages of Outsourcing
Following are major advantages of the outsourcing:

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 The projects or the tasks are outsourced to the others who are specialized in the
specific field. The vendors outsourced have the technical expertise as well as specific
equipment and it has been observed that many times it is better than the outsourcing
organization. It means that task can be of better quality, completed faster as well as is
having prompt delivery.
 It has the ability for concentrating on the core processes rather than supporting ones.
It allows the organization for more focusing on the core business processes of the
company.
 Outsourcing helps in mitigating the risks by shifting some of the responsibilities to
outsourced vendor.
 It helps in reducing the cost such as cost of set up. Therefore, the time as well as many
of the costs will be safe and the focus would be on something else (Yildiz and
Demirel 2014).
Disadvantages of Outsourcing
Following are the main disadvantages of the outsourcing:
 Outsourcing is consists of the risk of exposing the confidential information of the
company as well as the technology to the third-party such as if something is
outsourced then sooner or later it has been observed that there are imitation products
in the market.
 Sometimes, choosing the wrong partner to outsource involves common problems
areas such as stretched time frames of delivery, defects and others. Hence, it would be
easier if these factors would be mitigated within the organization rather than the
outsourced partner.

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 Outsourcing is the concept, which is known to be cost-effective but there are times
when there are hidden costs that are involved in signing of the contract. This may
possess great threat when it is signed across the international boundaries.
 The outsourced vendor may have lack of the complete focus on the tasks of the
outsourcing organization because they have to serve different companies at the same
time (Schwarz 2014).
Role played by Outsourcing in Global Context
Globalization has provided the scope for the organizations for not producing
everything on its own. Outsourcing is the best option, which allows the companies for
focusing on the fact that what they do in best way and what others can do it better quality,
higher quality as well as cheaper. It is the most popular concept that is applied in the various
companies as well as different industries all around the world. In the global context, it shifts
the transactions to the external supplier internationally with the long-term contract having
good relationship between two partners (Globerman and Vining 2017). It has become one of
the most megatrends in the various industries, particularly in the logistics as well as supply
chain management. The scope of the outsourcing is expected to grow as the companies’
focuses on their core competencies and it shed the perceived tasks as the noncore. The
common reason for outsourcing earlier was reduction of costs or the headcounts. However, in
the today’s world, there are more strategic drivers as well as focus is on the carrying out the
core value-adding activities in house in which the organizations strive for best utilizing its
own core competencies. It is unfortunate that there is rarely clear focus of organization for
determining the activities having core activities for the determination of strategic impact
(Nicholson, Babin and Lacity 2017).
In Mukwano Industries Uganda Ltd. case, the outsourcing of the services of freight
forwarding in the general as well as Mukwano industries particularly does not seems for

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developing highly publicized gains of efficiency. This company once has performed the
function of freight forwarding in house; however, afterwards they have make decision for
outsourcing the functions to the logistic companies of third party. They were among the other
manufacturing entities in the Uganda who realizes that with the help of entering engagement
of outsourcing, they are grappling still, with the rising costs in the port storage as well as
demurrage charges and so on (Kobrin 2017). However, it has been found that the decision-
making of freight forwarding outsourcing has no major influences on the efficiency of the
Mukwano Industries Ltd. Although, the planning as well as administration of the outsourcing
have the positive influence on the supply chain efficiencies with the administration of
outsourcing being dominant upon the independent variables. Therefore, Mukuwano
Industries has decided for back sourcing the function of freight functions. This step has
required for taking more caution for ensuring that the current manpower of the company is
having skills, job security and well trained for managing the function of freight forwarding as
well as for avoiding the losses of morale that are associated with the back sourcing (Kalinzi
2016).
Conclusion
Hence, it is concluded from the analysis that outsourcing has been emerged suddenly
as the result of globalization, which has grabbed the center stage attention. In order to remain
in the business as well as gaining the competitive advantages, outsourcing is done by the
companies for their some parts of operations. Further, it has been analyzed that there are
different advantages as well as disadvantages associated with outsourcing. Moreover, it can
be analyzed from the case study discussed that the organization should undertake thorough
audit of the provider of the services for ensuring that organization is having the necessary
human resourced that are skilled enough for handling the functions of freight forwarding and
understanding the client’s business needs. Therefore, outsourcing the processes in this

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globalized era requires thorough research to ensure that outsourcing would be advantageous
as well as bring competitive advantages the organization.

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Reference
Globerman, S. and Vining, A.R., 2017. The outsourcing decision: A strategic framework.
In Global outsourcing strategies (pp. 27-40). Routledge.
Gunasekaran, A., Irani, Z., Choy, K.L., Filippi, L. and Papadopoulos, T., 2015. Performance
measures and metrics in outsourcing decisions: A review for research and
applications. International Journal of Production Economics, 161, pp.153-166.
Kalinzi, C. (2016). Outsourcing (Logistics) Services and Supply Chain Efficiency – A
Critical Review of Outsourcing Function in Mukwano Group of Companies. Journal of
Outsourcing and Organizational Information Management, pp.1-22.
Khan, H. and Bashar, O.K., 2016. Does globalization create a'level playing field'through
outsourcing and brain drain in the global economy?. The Journal of Developing Areas, 50(6),
pp.191-207.
Kobrin, S.J., 2017. Bricks and mortar in a borderless world: Globalization, the backlash, and
the multinational enterprise. Global Strategy Journal, 7(2), pp.159-171.
Nicholson, B., Babin, R. and Lacity, M.C. eds., 2017. Socially Responsible Outsourcing:
Global Sourcing with Social Impact. Springer.
Schwarz, C., 2014. Toward an understanding of the nature and conceptualization of
outsourcing success. Information & Management, 51(1), pp.152-164.
Yildiz, S. and Demirel, Z.H., 2014. The benefits, risks and effects on performance of the
outsourcing: A comparative study of seasonal and permanent hotels. Procedia-Social and
Behavioral Sciences, 109, pp.514-521.