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Sample Essay on Outsourcing and Economic Abstraction

viajes por todo el mundoDue to rough competition, employers are obliged to actively use all possible ways to attract more skilled labor force. All outsourcing companies are aimed at seeking talented minds, but at the same time the core aim of every outsourcing process is costs saving. The point of transition to outsourcing is that the contractor’s services cost the company less than self-management and the quality of services at the same time is getting better.

There are three main types of outsourcing: functional – transfer of management functions; operational – transfer of production functions; resource – rejection of its own resources and purchase of them on the side. By the end of 2001, it was considered that the term outsourcing can only be applied to work with information technology (IT). But later it was applied also to such processes as work with marketing and accounting, legal and consulting services. The most common outsourcing spheres are: accounting, IT services and marketing, as well as logistics, personnel management and implementation of various programs, including projects for the protection of confidential information, software products for efficient distribution and storage of information in the archives, creation of products for work with statistics, enterprise security, etc.

Competition on the open market where not only price to quality ratio plays a decisive role, but also opportunities to meet customer needs in the best way makes managers use new management concepts such as total quality management (TQM), business process re-engineering (BPR), lean management, lean production, human resources management, reduction (downsizing) and decentralization.

One of the advantages of outsourcing is the fact that it allows companies to increase efficiency in general and use vacant organizational, financial and human resources for the development of new areas or concentrate on other efforts that require attention. This requires not only a permanent material and moral incentive of workers involved, but the constant monitoring of change of their preferences. In such a situation it is more profitable to attract “person from the outside”, rather than involved staff of the company as the outsourcers will be engaged in their own interest.

But on the other hand, outsourcing is not always safe as outsourcing from a legal point of view is first of all types of work which is based on trust. Outsourcing is not just a relationship “client – performer,” this is a partnership, where the main component is trust. That’s why some outsourcers build their work relationships only on trust with no legally bound contracts.

According to the Outsourcing Institute of the USA, outsourcing is an emerging way of activity aimed at optimization of the enterprises. The greatest growth is observed in the field of finance and accounting spheres. Statistics collected in 1997 by the American Management Association showed that already 20% out of 600 surveyed companies outsource at least some of the financial and accounting operations, and 80% – of the administrative functions. More and more people are getting involved in an outsourcing sphere these days. Flexible schedule, ability to work from home or even in another country are main merits of outsourcing process.

References:

  1. Condon, B. (2016). Study: Tax code slashes tax for hugely profitable companies. [online] USATODAY.COM. Available at: http://usatoday30.usatoday.com/money/companies/regulation/story/2012-08-16/ceo-pay-corporate-tax-code/57087676/1 [Accessed 15 May 2016].
  2. com. (2016). Outsourcing – OED. [online] Available at: http://www.oed.com/view/Entry/257590?redirectedFrom=outsourcing&/li>
  3. (2016). Is Outsourcing a Chance for Developing Countries?. [online] Available at: http://www.dailysabah.com/opinion/2014/06/17/is-outsourcing-a-chance-for-developing-countries
  4. Taheri, S. (2013). Advantages and Disadvantages of Outsourcing.
  5. Jozefak, P. (2013). Why Outsourcing Innovation Will Be Big in Tech and Beyond. [online] The Next Web. Available at: http://thenextweb.com/insider/2013/09/14/why-outsourcing-innovation-is-going-to-be-big-for-the-tech-industry-and-beyond/

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