Outsourcing

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In the wake of global competition, thousands of organizations have jumped onto the outsourcing bandwagon to save costs and improve operations. Despite the advantages of a perfectly managed outsourcing relationship, there are some potential negative impacts which must also be considered. The most significant one being the recent trend in outsourcing the R&D and product development activities out of the nation which until today had been restricted to the high-tech US research labs. The loss of the design activities could lead to losing innovation capabilities of the R&D powerhouses.
The downward trend in IT job openings is another cause of concern due to off shoring of IT services by most organizations. There are also some hidden costs associated with an outsourcing engagement which must be analyzed before taking the leap. These include the costs associated in the vendor selection process, costs of transition, costs associated with the cultural impact within the organization and the legal implications for any planned layoffs. There are also inherent costs associated with the learning curve associated with the adoption of business processes and/or new technologies. Finally, one must also consider the costs associated in managing the outsourcing relationship.
Other than reduced costs, the advantages of outsourcing are manifold. Improved efficiencies in operations, access to the latest technologies at affordable prices provided due to the economies of scale provided by the outsourcing partners. US organizations have been able to adopt standardized well-thought-out efficient business processes with outsourcing as a business strategy for long-term sustainability.

Outsourcing