Outsourcing, Essay Example

Outsourcing is an extremely popular business strategy in the modern developed economy. The process involves the delegation of specified duties to a third-party firm (Federico, 2010). The use of outsourcing services is not the same as a joint venture, as the final outcome will be recognized as the product of the original company only. The increasing commonality of the strategy has roused a large amount of unrest throughout the domestic workforce due to the perceived threats associated with international outsourcing. However, it is rarely publically acknowledged that outsourcing does not always involve job relocations (Federico, 2010), and can instead result in the growth of businesses who thrive on domestic outsourcing projects.

In both international and domestic types, outsourcing is often touted as a means of attaining knowledge from the interaction with a company who specializes in a service that is obviously of interest to the requesting organization. This theory is not necessarily untrue, but it is commonly misused due to the failure to engage thoroughly with the outsourced company. When the concept is applied with the appropriate vigor there lies the opportunity to gain some beneficial insights (Görg & Hanley, 2011). Sometimes it is not desirable to acquire this information, such as when outsourcing is a definitively more cost-effective solution than internalizing the work, and so the specialized skills that are expected to be characteristic of the outsourced business will provide the desired benefits of quality outcomes, reduced costs, and conserved time. The ultimate result of choosing to outsource duties will be determined by the specifics of the situation, including engagement, evaluation, and response.

References

Federico, S. (2010). Outsourcing versus integration at home or abroad and firm heterogeneity. Empirica, 37(1), 47-63.

Görg, H., & Hanley, A. (2011). Services outsourcing and innovation: An empirical investigation. Economic Inquiry, 49(2), 321-333.

Grimpe, C., & Kaiser, U. (2010). Balancing internal and external knowledge acquisition: the gains and pains from R&D outsourcing. Journal of Management Studies, 47(8), 1483-1509.