Sample Marking Paper on Advantages and Disadvantages of Outsourcing
Based on the past experiences of several companies and organizations facing production challenges, there has been a need to work on how these challenges can be minimized to ensure the company attains its goals and objectives in the production systems. This study focuses on the concept of outsourcing labor and critical aspects of production within a company or an organization, focusing on various aspects such as the importance and reasons of outsourcing labor, this will help to provide an understanding of the conditions that a Country should take when outsourcing from other countries. Outsourcing refers to the process of hiring workers to form outside the company or a country to work in a certain department or sector in the production system (Bilal 2021). The labor sector in the majority of production companies around the world is based on accessibility, skill levels as well as labor cost which requires the company or a country to greatly consider the various situations and decisions that can help to improve the production sector. In mo0st cases, companies have involved themselves in outsourcing of labor to help in improving their production results as well as have little to pay the labor since outsourcing is considered less expensive.
This research aims at providing answers to the underlying questions relating to the system of outsourcing labor to a company, these will help to easily understand the importance as well as the reasons for undertaking outsourcing in production to producers. The objections include:
- This research aims at evaluating the conditions for outsourcing production.
- Aims at identifying the advantages and disadvantages of outsourcing.
- Aims at understanding the process of outsourcing labor from other companies.
- Aims at highlighting the benefits of outsourcing to a company or organization.
Several studies have been done to help in understanding the nature of outsourcing between countries or companies. In a research study done by Sebastian on his study “Outsourcing on production and Logistics activities”, he highlights so the various drivers that foster for the outsourcing of production, most specifically labor, this is more frequent in more developed countries seeking to employ laborers from developing countries (Grimshaw 2015). The need to redefine the internal value chain systems in a company or a country pushes for vertical integration of the company activities. In this case, Vertical Integration that results from outsourcing labor in a country and a company may help develop strategies that will greatly enhance the performance.
Sebastian in his research states that the core benefit of Outsourcing to a company or a country is where the company can optimize the available resources and pay much attention and focus on core and important competencies. The outsourcing of labor in this case enables the firm to greatly invest in the production system which will help in improve on the quality of performance as well; as the general performance of the firm based on the nature and consideration used in outsourcing the labor force. These core competencies include Technological expertise in terms of products and the process of production, another competency is the diversification of skills and production abilities since the outsourced labor will create a broader system of production hence building up a strong working system to sustain the competition level in the market (Sebestian 2020).
In another research “The Impacts of outsourcing Labor” by Hassan Zaid EL Keilani, this research identifies the various factors involved in the outsourcing of labor from developing countries, the labor is in most cases based on the production sector. Zaid states that outsourcing labor to developing countries is based on the relatively lower cost of labor which makes it effective and convenient to easily pay the labor (Hassan & Sandhu 2018). In this case, Zaid states that the outsourcing of labor has resulted in an increase in the unemployment rate to the home country since the outsources labor is considered much productive, this leads to the laying of the long term employees who have worked in the sectors for a long time to pave way for the new team into the production system.
Research states that between 2003 and 2015, the number of outsourced jobs in the United States grew from 400,000 to 3.3 Million defining the increased rate of unemployment in the country by up to 34% which accounts for up to 865,000 unemployed people in2015. A team of researchers led by Brencher and Chen in 2010 introduced a model that would help in determining a comparison between the impacts of outsourcing labor into the country with the market equilibrium on the changes that will be realized. Bringing in new labor from outside count5ries to a country experiencing high unemployment rates, will imply that the employees in the home country will cause a stir in the economic level of the country due to an increase in the number of unemployed people due to the employment replacement. This will affect to change of labor equilibrium scenario.
STATEMENT OF THE PROBLEM.
With the rise of outsourcing cases in various countries such as the USA and other companies within countries, this scenario, therefore, provides a better understanding of the production system as to what is much needed other than laying off other employees to reduce the labor cost. This research aims at evaluating the major reasons that have pushed countries, companies, or firms to venture into outsourcing labor in the production sector of their operations. The main concern, in this case, is the benefits that outsourcing holds to the company’s performance. This study, therefore, identifies various aspects of advantages, disadvantages as well as benefits of outsourcing employees from other sectors.
Importance of outsourcing Labor.
Improved services- Outsourcing of employees and the labor force in a country greatly helps in improving the quality of service being offered from a country, outsourcing does not just focus on increasing the number of employees in the production sector, but it seeks to bring in a selected team of specialists with specific needed skills and knowledge on ensuring a needed quality of both the service or product is met.
Freeing up internal resources-Outsourcing plays a vital role in ensuring that the outsourced employees focus on a specific sector of production hence reducing cases of overexploitation which tend to affect the employee’s performance (Doval 2016). Outsourcing ensures that tit minimizes cases of employees redundancy since the outsourced employees will focus on what matters hence enabling a company to perform better.
Strengthens international ties– Outsourcing requires a country to follow a certain protocol and procedure to obtain the outsourcing rights, this is through negotiating with the other country hence making agreements on the deal. This helps a developing country to enhance and strengthen its relationship with other countries hence having economic benefits.
Reduced labor cost- Outsourcing employees are seen to be less cheap than employing workers internally, this is because focuses on a specifically qualified labor force. In another case, the foreign worker may require fewer wages hence saving a lot from taxes and other additional payment charges (Somjai 2017). A company or a country can also save a lot of funds that could be used in training the employees on a certain production skillset, this is more economical since outsourcing focuses on bringing in the qualified and well-skilled labor force.
Increases a country’s unemployment rate– Outsourcing employees means that several employees are laid off from work, while in the same case, most people within the home country fail to get the job hence maintaining the level of unemployment since the chance is given to foreign people. This could greatly lead to an increase in cases of income and economic disparity in a country hence negatively affecting the country’s GDP (Aswini 2018).
Lack of trust in the labor force- In most cases, people would tend to lose trust in the services and products being offered by the outsourced team of employees. In America, consumers believe that the services and products produced by Americans are much safer than those from outsourced employees. This challenge could result in to drop in the consumption rate of certain products and services since the consumers will shift to more trusted services and products.
CASE STUDY ANALYSIS.
The Cases of outsourcing of labor in the Shoe manufacturing industry in the USA and Bangladesh present a varied system of outcomes. In the case of Outsourcing labor in the USA shoe industry, research states that in 2020, American footwear is estimated to hit $365.5 billion and projected to hit $530.3 billion, this is due to the expanded outsourcing system labor force from various countries to help in increasing the quality and brands of shoes in America to meet the international demand (Žunac 2019). USA has partnered with various countries where up to 4.5 million employees from various countries around the world have been employed in the Shoe manufacturing industry in the USA under the Labor outsourcing programs.
Unlike the USA that seeks to source a wide range of skills in shoe production, in Bangladesh, the country has cheap labor leading to the availability of a wide leader and footwear industry (Syrisko 2018). Bangladesh, in this case, has minimal instances of outsourcing labor but instead, the country welcomes foreign investors to set up their footwear business to promote the annual production of shoes in the country.
Political- Outsourcing has established a good political relationship between the USA and other countries due to the partnership of labor provision, This greatly helps in making political ties and agreements in terms of economic growth as well as the political establishment (Bailey 2018).
Economic- Outsourcing greatly contributes to the improvement of the economy since the foreign employees in the host country greatly contributed to the payment of taxes as well as improving the quality of products which helps in expanding the countries market size in the case of the international market.
Social– The interaction between people in a country and the foreign nationals who have been outsourced helps in building a countries relationship since it boosts the interactivity level hence creating an environment for sharing of ideas and culture (Simões 2020). This helps in strengthening the bond between various countries, for instance, foreign nationals investing in Bangladesh can learn new ideas on shoe production.
Technological– Outsourcing helps in sharing of information and even technical equipment between countries making the ties. This helps a country to introduce new technology from other countries that will suit the skills of the outsourced employees.
- Outsourcing creates a great business opportunity since the countries will be able to share the skills through sourcing out laborers which will help in enhancing the quality of products and services.
- This will also help in building up a wider market to sell the wide variety of products and services with different cultural qualities produced by one country and can be sold to several countries. Outsourcing investors also helps in providing business opportunities for countries like Bangladesh, the investors provide a ready market for the available leather and labor.
SUMMARY AND FINDINGS
Outsourcing plays a big role in creating an international partnership that strengthens the relationships among countries in terms of economy, political nature, and social interaction. Despite the challenges that outsourcing could bring ii to a country such as an increase in unemployment level and economic disparity, these challenges could be greatly reduced by creating other opportunities such as building new companies within the company to provide employment opportunities for the unemployed population while the outsourced hold the specific sectors that require high-level skills (Baguzova 2017). In another case, the growth of new markets around the world has helped countries to widely sell their products to new markets, this has been greatly contributed by the outsourcing of employees to produce various brands and quality of products and services to meet the international market demand. Outsourcing, therefore, helps in uniting several countries together to share various resources available, these include labor, technology, finances, raw materials, and creating a market for all the involved countries, therefore building up good and strong international relations.
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Syrisko, Y. A. (2018). DEVELOPMENT OF THE SHOE MANUFACTURING INDUSTRY ENTERPRISE IN BANGLADESH STRATEGY BASED ON SWOT AND PEST ANALYSIS ON THE EXAMPLE OF” Leather shoes” LLC. In Recent Achievements and Prospects of Innovations and Technologies (pp. 379-389).
Sebestian, H. (2020). Making cheaper labor: Domestic outsourcing and development in the Galilee. Anthropology of Work Review, 41(1), 24-35.
Žunac, A. G., Kordoš, V., & Zlatić, S. (2019). Segment analysis of outsourcing services necessary for conducting a cost-benefit analysis based on an example USA shoe and footwear industry. Zbornik radova/20. međunarodni simpozij o kvaliteti. Kvaliteta jučer, danas, sutra. Pula, Croatia, 20-22 March, 399-411.