Why Companies Choose to Outsource

Why Companies Choose to Outsource

Lisa L. Castle

FINC 320

December 14, 2009

Abstract

Outsourcing has become a normal activity for multi-national companies. There is no question that outsourcing has fundamentally changed the global business landscape. There are many opinions relating to outsourcing but they often contradict the behavior of the person with the opinion. While I believe that companies need to do whatever is best for them to grow, I do feel for all the people that lose their jobs due to outsourcing. This paper will discuss the various reasons companies outsource. You will find that most companies do this to benefit the company and it does not always have to have bad consequences. The paper will also discuss some of the barriers that a company may come across by outsourcing.

Outsourcing is a method that a company gets involved in by hiring other companies to do their business process or at least part of the business process in order to save money and allow the them to concentrate its resources to more important matters. Companies today prefer outsourcing in developing countries, such as Mexico, Philippines, China and India because of the relatively cheap labor these countries offer.

If a company is able to divide their business process that allows them to concentrate on more important matters; such as marketing, looking for new clients, and other money making ventures that should take priority. Outsourcing jobs to foreign countries that charge less will obviously save the company money. By doing this, you will be able to save on company expenditures and make your company more competitive in the business world. But the company doing the outsourcing must remember that they are selling a high quality product and therefore should make sure whatever country they decide to use for the outsourcing, must possess the same high quality standard.

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