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This paper identifies trends in the world business of outsourcing and some of the various subsets. It entails to examine the past findings regarding outsourcing and connects it with professional opinion and current academic issues to face the problems that affect outsourcing. This is done by identifying the strength of outsourcing and ways in which business can use its benefits to their advantage. Outsourcing is vital for every business, regardless of its location or size. Researches show that every continent has recognized outsourcing, and many companies have considered outsourcing as a sustainable and proven part to achieve companies strategic goals. Outsourcing is extremely beneficial to business as well as to citizens of any country who are involved in outsourcing. This is because outsourcing combines the complexity of investing, contract management, and logistics. Researches show that outsourcing is developed and adopted by many organizations globally.
Opportunities and Trends Regarding Outsourcing
Trends in Business Process Outsourcing
The process of outsourcing in a business is considered as activity that influences the effectiveness of a business model. The main purpose for outsourcing and some of its related activities such as home shoring and off shoring still hold true. Companies engage in such activities in order to reduce or save the cost of what they provide. Outsourcing, off shoring, and home shoring are the latest tools that businesses engage in to achieve its strategic goals. Outsourcing supports a business core competency, for example, payroll and general accounting, human resource management, as well as customer care functions and IT service. Research identifies India as one of the countries that have become extremely involved in the process of outsourcing.
The Business Process Outsourcing has enabled India to mature rapidly in terms of economy, since its labor market has matured. Indian labor force is intensely competitive and able to handle critical and complex functions. On the other hand, the Philippines has also shown an improvement on this trend; therefore, it is also considered as an attractive business environment. The cost of outsourcing has increased due to the increased demand of such services. This has been seen in the labor market of India. The high maturity of India has made it the number one destination for research and development project and large development project in software. India has also recorded a large number of outsourced jobs as compared to the United States. China has also developed its labor force, not in research and development like India, but in the industry of service supply. China has been ranked in the fifth position for services of business support, being behind Poland. It has tremendously improved and jumped to the fifth from thirteenth position. This has been due to the implementation of the outsourcing process (IBM Global Services, 2008).
The global economy has embraced the Business Process Outsourcing and outlined various advantages and critical downfalls that must be avoided. Outsourcing saves money since it allows a company to concentrate more on its core competitors and focus its limited resources on its competency. When a company is involved in outsourcing, it reduces the opportunity cost expenses incurred in advertising products (Kevin & Misiaszek, 2007).
Trends in R&D Outsourcing
The inherent nature of research and development project has led to a decline in outsourcing. Research and development involves activities that are typically investments with a long period of pay-pack. Due to these reasons, companies opt to hold to long-term investment until they are confident that they have recovered the companys economy. Companies that seek to reduce its certainty risk have weighed back its research and development papers to foreign countries. According to researchers, data shows that India is still the leading country under Trends in R&D Outsourcing followed by the U.S. that has tremendously improved from the sixth position up to the second position, by the year 2009. The U.S. has been able to jump to the sixth position because it has chosen to outsource from home or markets that were more secure. Trends in R&D Outsourcing should be adapted by businesses that require large capital outlay. Research and development paper involves large capital with no returns. Outsource labor must offer credible service at the right cost to equilibrate the tension that an organization needs. Research and development outsourcing has been mastered and proven to work effectively in service delivery regarding complex projects. Examples of experienced and talented staff have been recognized in the U.S. These staffs are involved in research and development jobs in captive multinational companies as well as in parent companies in the U.S.
Trends in Production Outsourcing
Trends in Production Outsourcing have suffered decreases in businesses growth, in 2009 compared to 2008. This was due to the new investment in production that anticipated market growth. When a company is involved in Production Outsourcing, it reduces the opportunity cost expenses incurred in advertising products into noncritical business function. Outsourcing enables a company to mature and develop since they can invest in services and business that are productive.
In the BRIC countries, which include China, Russia, Brazil, and India, the decline in Trends in Production Outsourcing was highly pronounced. However, Mexico and the U. S. recorded an increase in the production investment. China, Mexico, and the U. S. consider outsourcing in times of uncertainty. Trends in Production Outsourcing indicate that, during times of economy duress, business must invest safely in countries that have a predictable market. These are countries such as Mexico and the United States (Kevin, 2007). However, the global increase in the economy has made many companies produce their products overseas in order to remain profitable and competitive in the market. The U.S. has been hit by this trend in its apparel industry. This is because their competitors have deep engineering knowledge, and in order for the U.S. to remain in that field of manufacturing, it must outsource its production from the labor market that has specific mechanisms and technology, for example, sophisticated machinery. Apparel manufacturing company requires human labor that is extensive and depends less on scientific research and high-end technology. This will make it easier to outsource.
The main purpose for outsourcing and some of its related activities such as home shoring, and off shoring still hold true. Companies engage in such activities in order to reduce or save the cost of what they provide. Outsourcing, off shoring, and home shoring are the latest tools that businesses engage in with an aim to achieve its strategic goals. The global economy has embraced this process and outlined various advantages and critical downfalls that must be avoided. Outsourcing saves money since it allows a company to concentrate more on its core competitors. When a company is involved in outsourcing, it reduces the opportunity cost expenses incurred in advertising products to noncritical business function. Outsourcing has been regarded to be more beneficial to businesses that are small and medium in size, as well as those organizations that lack employees who are experts in performing specific duties.