Outsourcing and Organizations

Running head: OUSTSOURCING AND ORGANIZATIONS

Outsourcing

Kyrica Veney

BUS 630: Managerial Accounting

Instructor Stacy Hiles

Ashford University

November 22, 2010

Abstract

As outsourcing lessens a business’ total costs, it can also cut jobs. Outsourcing is defined as obtaining goods from an outside supplier. So, when organizations utilize the services of outside suppliers as opposed to internally, they can benefit from costs being cut and profits being increased as a direct result. Throughout the following document, the pros and cons associated with outsourcing will be discussed. More in particular offshore outsourcing to low labor rate countries such as India and China are examined. Statistics are provided as to how much outsourcing Fortune 500 companies engage, and how jobs in the United States are impacted. In addition, the financial implementations and profitability of outsourcing are discussed.

Outsourcing

Imagine creating opportunities for your company to thrive exponentially in the long run. There are several strategies in which organizations can use to secure success of their business. One method in particular has proven to be beneficial to many businesses, organizations, and corporations, outsourcing. Outsourcing is described as obtaining goods or services from an outside supplier in place of an internal source. When companies outsource, they can dramatically lower total costs. Bloomberg Business Week describes the future of outsourcing as a way for organizations to “create radical business models that can give them an edge and change the game in their industries” (2006). There are other perspectives on outsourcing such as they take away from American jobs when American companies use foreign suppliers. In fact, there are lists of pros and cons associated with outsourcing. Within the following text, some pros and cons of outsourcing will be discussed such as job loss, financial implementations, potential recognition, and...