The terms outsourcing and offshoring are often used interchangeably, but it’s helpful to know the difference between the two concepts. doi: 10.1002/nav.20372. Advantages and Disadvantages of Outsourcing to Low-Cost Countries (LCCs. Since there becomes a need of training of instructions or keeping a translator as well. Venza Group (2013) ‘2013 Trustwave Global Security Report Highlights Continuing Need for PCI Compliance Training to Prevent Data Breaches’, VENZA® – Better Visibility. By utilizing Chinese work, Wal-Mart can amplify its enterprise’s benefits abroad to the United States, where the value run is a lot higher. New-age organizations are opting for sourcing in low-cost countries as it helps them to cut down the operational expenses. Advantages and Disadvantages of Outsourcing to Low-Cost Countries (LCCs. If a U.S. company outsources to a country with lower wages, more lax labor laws or lower environmental standards, the resulting good or service may not be up to the standards that the U.S. government has agreed should apply in our country. Additionally, by utilizing modest work in different nations, Wal-Mart extends their partnership around the world, incorporating opening stores in those nations where the organization utilizes shoddy, remote work. 9th Dec 2019 As an example, if a car is recalled for faulty parts and that part was outsourced, the car manufacturer carries the burden of correcting the potentially damaged reputation of the car maker but not the outsourced authority. They can spend more time on analysis and measurement of company’s parameters. This is also helping business firms to reduce their cost of production and thereby, intriguing a large number of customers. For example, when outsourcing, you may experience problems with: Offshore outsourcing, although potentially more cost-effective, may present additional challenges such as hidden costs of provider selection or handover, severance and costs related to layoffs of local employees who will not be relocated internationally, etc. The most often used low cost countries (LCCS) are China, Mexico, India and Asian Tigers, with Mexico being the United States’ country of choice due to how near they are. Any type of essay. Political issues can cause shutdowns or problems with employees and thus stop production as well. Describe the advantages and disadvantages of W, 1. Advantages of Offshoring. A project leader is a person who is responsible to carry our company goals more effectively but if the leader is striving to understand the language of team members or vice versa and if there will be communication gap between team lead and members or between other members then it will be difficult to cooperate with each and the goals of the firm will be fading away. And the third party contractor was away from all troubles. Additionally, some processes are temporary and the organization does not intend to hire in-house professionals to perform the tasks.Outsourcing to the low-cost countries has a fair share of advantages and disadvantages,here is a summary of the advantages and disadvantages: You should examine carefully all the pros and cons of outsourcing to make sure that the benefits outweigh the risks. 3.3.2 Language barriers lower project leader effectiveness. The price of raw materials is cheaper in the Southeast Asian countries and the Middle-east nations, unlike the Western world. Accessed October 24, 2019. Outsourcing procurement lowers costs because you won’t be devoting office space or IT resources to maintaining your own in-house procurement system. Where you can get pre trained experts of outsourcing from companies which are specialized in business process outsourcing who can provide the organization with the best procurement solutions. Below are the few advantages and disadvantages of outsourcing. In most U.S. political discussions, people use the term “outsourcing” to refer to either outsourcing to a foreign company or offshoring – or both. Companies are enhancing their operational efficiency owing to low-cost country sourcing activities. Outsourcing has become noticeable since the popularization of the resource based view – organizations focus on their core competencies (Prahalad and Hamel, 1993) and transaction cost economics – making products in house or buying them from market (Williamson, 1981). We’ll even meet a 3-hour deadline. How can the risks of outsourcing be mitigated? Available at: (Accessed: 14 December 2018). Available at: (Accessed: 14 December 2018). Available at: (Accessed: 14 December 2018). Sometimes companies outsource because of the opportunity costs of doing or producing a good or service themselves. This is not an example 2. (Flatworld Solutions Pvt, 2018a), 2.3 Outsourcing enhances resource allocation. Students looking for free, top-notch essay and term paper samples on various topics. Taking in figures, currently IT firms all over the world out sourcing their services by 67%, financial firms 33% and there are many more services which are being outsourced at higher percentage and are increasing every year. This further reduces the prices of goods and services while attracting a large pool of customers. Outsourcing encourages firms to rapidly increase their procurement experts to coordinate quickly changing business sector needs in current scenario. Registered Data Controller No: Z1821391. Gansberg, K. (2017) 5 Benefits of Outsourcing Manufacturing. Companies hold different areas which require an expert of that particular field in order to get the maximum efficiency from that corner. Darden estimates that 567,000 payment card numbers could have been compromised. Patel, D. (2017) The Pros And Cons Of Outsourcing, Forbes. of the work written by professional essay writers. If marketers opt for sourcing activities in low-cost countries, there will be lesser energy costs when compared to the developed nations. Reference this. Available at: (Accessed: 14 December 2018). Outsourcing isn’t right for every situation, and so you’ve got to think long and hard before investing time and energy in farming out work. Some disadvantages can be a poor quality of manufactured items, poor management of workers, poor data or systems maintenance or upkeep, which can result in lost information, distance from the manufacturing plant and headquarters, as well as political issues within the country and more (Voranai). SCM can without much of a stretch destroy valuable hours, so you can utilize those spared hours for showcasing, setting up client connections, and growing new thoughts. Compare the Top 3 Financial Advisors For You. The main reason that companies outsource to other countries is because of the low cost of products. Nowadays, an increasing number of organizations are resorting to sourcing activities in order to make the most of the perfectly competitive market scenario.