Outsourcing refers to handing over a company’s resources to a third party for management in order to achieve a specific outcome. For example, in the case of XYZ Company they want to improve their profitability at the end of the day. Companies mostly outsource to gain competitive advantage. My perspective for outsourcing overseas will depend on the type of the stakeholder I am in the company that wants to outsource and my ideals (Robertson, Lamin, & Livanis, 2010).
If I am consumer, I will be against it. I will be concerned with the quality of the products and privacy of my personal information. But, if I am a stockholder I will be for it. This is because outsourcing will result to profit maximization. That means, my investment returns will increase. Also, if I am an employee, I will not encourage outsourcing as it will lead to layoff. Outsourcing need to be looked in depth using stakeholder’s theory. What will be good and of benefit to the many should take the day.
Pros and cons to outsourcing overseas
If the company XYZ decides to outsource in India it will reap benefits such as; availability of skilled workforce with strong work ethic and ready to take lower wages, telecom infrastructure that meets international criterions, support from the Indian government that encourages foreign investments through friendly laws and lower taxes and presence of quality standards that ensures ISO standards are met (Knights & Jones, 2007).
The disadvantages of outsourcing include; security fears, quality compromise, concern for the environment and unfavorable working conditions. The information privacy is important in every business, if the overseas vendor does not have security systems in place, breach of privacy may take place and as a result ruin the company that outsources. As far as the quality of products or services is concerned, the outsourcing company must look on the history and technical capability of the vendor before entering into an agreement. It is very common to find overseas vendors engaging in activities that are not environmental friendly. It has also been noted that some overseas vendors employs under age children in their production processes. This may result to ethical scandals. For example, Wal-Mart had two close two factories in India due to child labor related issues (Knights & Jones, 2007).
Jenny should challenge the CEO
Although, challenging a CEO is putting ones employment contract at a stake, Jenny should challenge the CEO with a mind of making their organization better. Jenny should seek to know why the CEO is considering India, his motherland, and not any other country. The CEO may be having vital business information that Jenny lacks. Also, Jenny should explain why maintaining all the operations at their country is beneficial to the company XYZ.
Jenny may be a picture of the stakeholders of the company XYZ. Her belief in American – manufactured cars may also be the one in the XYZ stakeholders and therefore outsourcing may trigger the worst in XYZ Company. The clients of XYZ may start seeing products of XYZ as foreign and therefore may decide to move to other local businesses. Also the investors may decide to withdraw their investment if they believe in investing in American businesses that does all their activities in their land.
Potential problems with outsourcing to India
The major problem will be people will lose jobs. The locality where XYZ Company is will experience a surge of unemployment. Although, those jobs and many others will be created directly and indirectly in the vendor location (in India) in U.S jobs will be lost (Knights & Jones, 2007).Two, the board members of the XYZ Company may start thinking the CEO is favoring his mother land. This can result to hatred and the relationship between the CEO and the board members may deteriorate. Third, the products that would be produced may be of low quality. This can lead to consumers moving to the competitors. Lastly, consumer’s information security may be compromised. This may result to XYZ paying millions of dollar in legal cases.
Alternative solutions to this case study
Instead of outsourcing XYZ company should first identify their idle capacity. They should know the resources they have that are not generating any income. For example, they may be having outlets that are nor profitable. They should close them to cut overhead costs. Also, all rented spaces should be fully utilized or re-sized. This can reduce rental expenses. Also, XYZ Company may decide to move their operation to areas where overhead costs are not too high. Secondly, the idea of working from home should be embraced though it will come with challenges of managing virtual teams. It is better for employees to work from home than laying them off. Only employees whose job roles cannot be done from home should be left in the office. Lastly, XYZ Company should identify where most of their overhead expenses goes to, if it is in travelling cost they reduce them and if it’s in employees medical covers they should improve their working conditions and engage employees in health and wellness training.
Pros and cons to outsourcing overseas
If the company XYZ decides to outsource in India it will reap benefits such as; availability of skilled workforce with strong work ethic and ready to take lower wages, telecom infrastructure that meets international criterions, support from the Indian government that encourages foreign investments through friendly laws and lower taxes and presence of quality standards that ensures ISO standards are met (Knights & Jones, 2007).
The disadvantages of outsourcing include; security fears, quality compromise, concern for the environment and unfavorable working conditions. The information privacy is important in every business, if the overseas vendor does not have security systems in place, breach of privacy may take place and as a result ruin the company that outsources. As far as the quality of products or services is concerned, the outsourcing company must look on the history and technical capability of the vendor before entering into an agreement. It is very common to find overseas vendors engaging in activities that are not environmental friendly. It has also been noted that some overseas vendors employs under age children in their production processes. This may result to ethical scandals. For example, Wal-Mart had two close two factories in India due to child labor related issues (Knights & Jones, 2007).
Jenny should challenge the CEO
Although, challenging a CEO is putting ones employment contract at a stake, Jenny should challenge the CEO with a mind of making their organization better. Jenny should seek to know why the CEO is considering India, his motherland, and not any other country. The CEO may be having vital business information that Jenny lacks. Also, Jenny should explain why maintaining all the operations at their country is beneficial to the company XYZ.
Jenny may be a picture of the stakeholders of the company XYZ. Her belief in American – manufactured cars may also be the one in the XYZ stakeholders and therefore outsourcing may trigger the worst in XYZ Company. The clients of XYZ may start seeing products of XYZ as foreign and therefore may decide to move to other local businesses. Also the investors may decide to withdraw their investment if they believe in investing in American businesses that does all their activities in their land.
Potential problems with outsourcing to India
The major problem will be people will lose jobs. The locality where XYZ Company is will experience a surge of unemployment. Although, those jobs and many others will be created directly and indirectly in the vendor location (in India) in U.S jobs will be lost (Knights & Jones, 2007).Two, the board members of the XYZ Company may start thinking the CEO is favoring his mother land. This can result to hatred and the relationship between the CEO and the board members may deteriorate. Third, the products that would be produced may be of low quality. This can lead to consumers moving to the competitors. Lastly, consumer’s information security may be compromised. This may result to XYZ paying millions of dollar in legal cases.
Alternative solutions to this case study
Instead of outsourcing XYZ company should first identify their idle capacity. They should know the resources they have that are not generating any income. For example, they may be having outlets that are nor profitable. They should close them to cut overhead costs. Also, all rented spaces should be fully utilized or re-sized. This can reduce rental expenses. Also, XYZ Company may decide to move their operation to areas where overhead costs are not too high. Secondly, the idea of working from home should be embraced though it will come with challenges of managing virtual teams. It is better for employees to work from home than laying them off. Only employees whose job roles cannot be done from home should be left in the office. Lastly, XYZ Company should identify where most of their overhead expenses goes to, if it is in travelling cost they reduce them and if it’s in employees medical covers they should improve their working conditions and engage employees in health and wellness training.
