Introduction to Outsourcing
Discuss about the Comprehensive Insight into Supplier Quality.
Outsourcing is considered as a method on which emphasis is given by various companies. On this method, the focus is given so that the overall cost can be minimized by transferring the functions of the organization to the other party. The companies outsource the services so that it can be conducted with efficiency. By this strategy, it is seen that operating costs and also profits are attained which helps the company grow in the market.
The functions are outsourced so that activities can be managed in a proper manner and also it gives impact in enhancing the satisfaction level of the customers. The outsourcing of the functions is done by many companies and the company which is selected for this assignment is Hewlett who outsources the functions of the company. This report will focus on the advantages and disadvantages of outsourcing a function of the company to the other company or the third party.
This paper will analyze the advantages and disadvantages of functions that are outsourced by the company to the third party. The main objective of the report is to evaluate the overall advantages and disadvantages of outsourcing by considering the Hewlett Company.
In this report, outsourcing is one of the factors on which proper discussion will be made. The company on discussion will be made is Hewlett. There are many advantages and disadvantages of outsourcing the activities of the company. Strategies will also be discussed in this paper and also evaluation will be made so that company can attain a large market share in the market.
According to Oshri, Kotlarsky, and Willcocks (2015), outsourcing is one of the methods that are used by the organizations so that they can share their responsibility by taking help of the third party. The activities are outsourced to the other party through online and offline. The third party is involved and takes the responsibility to conduct the activities with efficiency. It is important for the organization to consider this method so that in the right direction the activities can be conducted. The process of outsourcing helps to give emphasis on enhancing the efficiency.
Hewlett is one of the largest companies and headquarter is in Palo, California. The company conducts the activities in the field of IT and there are many operations in which the activities are conducted like information technology industry and cloud programming. The company has outsourced the functions to the companies and also to third which has given a positive impact on the overall activities (Willcocks and Lacity, 2016).
Hewlett’s Outsourcing Practices and Objectives
The method of outsourcing is managing the internal process by the third party. It assists the organization to emphasize more on the activities of the company which minimizes the operational costs. There are various options that can be analyzed for the company so that business functions can be outsourced easily. Hewlett focuses on transferring the activities to the third party so that it can be conducted in a proper manner. Hewlett is considered as the biggest company who outsource the activities to the third party so that the operation cost can be reduced. It can be evaluated that when activities are outsourced and if it is not conducted properly then it can give negative impact on the company.
The objective of Hewlett is to outsource the activities so that quality services can be given by the customers and also growth can be achieved in the market. It affects the opportunities which are related to temporary and permanent employment so that skills can be enhanced by the employees. Strategies are important for the company to conduct the activities and if proper strategies are considered then it can be evaluated that at the time of outsourcing the company will achieve growth. The emphasis should be given by the company on the strategies that should be implemented so that assistance to the end users can be given on the internal basis (Gantman, 2017). The activities that are outsourced by the Hewlett are
- Human resource management
- services management
- technical process
- Facilities related to research
Outsourcing is a function that can give benefit to the company and can help them to attain competitive advantage. In the recent scenario, there are various organizations who are considering outsourcing as a part of business process. There are many advantages which are enjoyed by Hewlett by outsourcing the activities to the third party.
It is analyzed that Hewlett minimizes the overall operational cost by outsourcing the overall activities like workers salary expenses, expenses related to work and the expenses that are concerned to offer to manufacture set up to the workers. If developed countries are considered then it is seen that cost of offering the facilities is cheap in outside the countries or undeveloped countries. It assists Hewlett in achieving a cost advantage in the competitive environment (Vining and Globerman, 2017).
By outsourcing the overall activities, it is seen that company can emphasize the aspects of their organization. The outsourcing assists Hewlett in conducting all the resources in the business activity so that improvisation can be made in the functions of the organization. According to Chou, Techatassanasoontorn and Hung (2015), the company gives emphasis on manufacturing the hardware and the information is transferred to the third party organizations. This helps Hewlett to increase the quality of the services so that customer satisfaction can be enhanced.
Advantages of Outsourcing
The company outsources the activities to the other organizations that have specialization in a specific sector. The employees of the company should have proper knowledge and skills so that the activities can be conducted easily as compared to the outsourcing company. This assists the organization to conduct the activities with more efficiency.
According to Worthington (2015), Tesco rather than training the workers in context to the latest technology, the activities are outsourced so that third party can complete it with efficiency. These assist the company in minimizing the overall time and expenses for the activities and also achieve competitive advantage.
The function of outsourcing offers a company good quality services by the third parties that help to enhance the efficiency of the workplace. The outsourcing contract helps the company to conduct the task with good quality. It is seen that outsourcing of the functions which is remaining can help the workers to emphasize the tasks and completing with more efficiency. Hewlett has implemented a proper structure in the company that helps to emphasize the overall objectives (Kerzner, 2018).
It is seen that agreement related to outsourcing helps the company to share the risks of the business with the other companies in the market. The contract of outsourcing has offered a good quality of the services. If they are not able to do so then the company who are taken the responsibility can be sued or have to give compensation. This helps the company to share the risks and it forces organizations to maintain good quality so that customers can also be satisfied. Hewlett implement this policy so that assurance can be made of the good quality and also the risk can be shared with the other companies or the outsourced company (De Weerdt and Hirvonen, 2016).
If there are many advantages, then there are also many disadvantages in the process of outsourcing the activities. It is seen that as the outsourcing has enhanced there many issues that are faced by the companies at the time of outsourcing the activities of the company.
It is seen that when the contract of outsourcing is signed then one company transfers its responsibilities and also the rights to the other company or the third party. The company has the ownership but the managerial control is transferred to the other company (Bloom et al., 2014). It can be analyzed that the outsourcing company will not be able to work according to the specified principle so this issue can give negative impact on the activities (Gorla and Somers, 2014). Hewlett has faced the problem in their data centers which are in California. So, it is seen that proper control is difficult for the organization.
Disadvantages of Outsourcing
At the time of outsourcing the activities of the company, it is seen that organization has to consider the rules and regulations of the various countries and organizations. It is seen that contract of outsourcing focuses on the charges of the services but the company has to various many hidden expenses. Also, there can be various legal charges that verify the outsourcing agreement. It is seen that change in the regulation of the market of the specific country can give impact on the cost of Hewlett as there are many rules and regulations that should be implemented so that organization structure can be maintained.
According to Durst, Edvardsson, and Bruns (2015), at the time of outsourcing a business, it can give impact on the image and quality of the company. If the function of the center is outsourced to the third party of a different country then it can create language barrier and dissatisfied the customers. It is seen that consumers get irritated at the time of dealing with an operator who is using a strong accent. Hewlett is outsourcing the activities to Singapore and there are many customers who have a thick accent which can enhance frustration for the customers to understand (Gurung and Prater, 2017).
It is analyzed that information of the organization is important and if it is leaked then it can create a negative impact on the revenue of the company. According to Dhillon, Syed and de Sá-Soares (2017), at the time of outsourcing the activities, it is seen that company faces a threat in maintaining the privacy of the information. Also, the problem related to information loss is analyzed at the time of outsourcing the activities. The company has to share the information with the other company when the activities are sourced externally.
Hewlett has to face the risk as it is seen that they have to share the information with the customers who are working in the data centers. If activities are not conducted properly in one center then it can leak the information of the company. When the information is lost by the company then other company can take advantage and it can give negative impact on the overall operations (Garba et al., 2015).
Hewlett has achieved a competitive advantage in the market by outsourcing the information technology services to the other party companies. The company is popular for the services which are offered to the customers with the help of outsourcing. It is seen that Hewlett has done a research with the companies and with the customers who are not a part of the company (Handley and Angst, 2015). It is analyzed by the study that there is a link between outsourcing the IT services and improvising the functions of the business. To outsource the IT services it is seen that it is a part of an effective management strategy that is considered by the company so that performance can be enhanced (Lahiri, 2016). The outsourcing cities are India and Brazil as shown in figure 1.
Challenges of Outsourcing
In the research, advantages of outsourcing that has given impact on the factors of the business
- Selling, general and administrative costs: by focusing on this point it is seen that companies have a slow growth due to outsourcing. The SG & A costs of outsourcing company were not more than 4.2 points as compared with the competitors.
- The rate of return on assets: it is seen that rate of return on assets has enhanced. Their rate was low then the standard of the market but when the outsourcing strategy is implemented it is seen that it has enhanced by 16.1 points (Brumm et al., 2015).
- Income before interest and taxes: it is seen that the companies have analyzed growth in income if the comparison is made with the competitors.
According to Dinu (2015), the research proved that benefits of outsourcing the IT service of the companies. Hewlett has achieved success in the outsourcing process of the business by introducing various technologies and strategies. The organization tries to update the policies according to the market conditions so that activities can be conducted smoothly. The company also gives emphasis on maintaining the environment of the company so that employees can conduct their task with efficiency.
The strategy related to outsourcing assist Hewlett to offer satisfaction to the customers. The satisfaction level of the customers is very important in Hewlett if the comparison is made with the competitors present in the market. It is seen that the strategy of outsourcing is beneficial for the company as it helps the company to be successful in case of Hewlett.
Also, there is an increase in the venture sites when the company gives focus on outsourcing the activities. It is seen that there are many advantages which are achieved by the company as it helps to increase the capabilities on a global basis and also helps to achieve more efficiency in the work. The flexibility is maintained by the company and also it gives impact on the sustainable development in future. Outsourcing is one of the best methods that should be considered by the company so that growth can be achieved in the market (Uluskan, Joines, and Godfrey, 2016).
Conclusion
By evaluating the above report, it is seen that there are many companies who outsourced the activities of their company. This offered many advantages like reduction in cost, flexibility and also increase the customer service. There are many companies who face issues which are related to hidden cost, layoffs, and quality risk. So, outsourcing the functions has established a clear and strong guideline that helps in the process of outsourcing.
References
Annosi, M.C., Khanagha, S. and Magnusson, M., 2015. A multi-level study of managerial control influence on self-managed team innovativeness. In Academy of Management Proceedings (Vol. 2015, No. 1, p. 16627). Briarcliff Manor, NY 10510: Academy of Management.
Bloom, N., Garicano, L., Sadun, R. and Van Reenen, J., 2014. The distinct effects of information technology and communication technology on firm organization. Management Science, 60(12), pp.2859-2885.
Brumme, H., Simonovich, D., Skinner, W. and Van Wassenhove, L.N., 2015. The Strategy?Focused Factory in Turbulent Times. Production and Operations Management, 24(10), pp.1513-1523.
Chou, S.W., Techatassanasoontorn, A.A. and Hung, I.H., 2015. Understanding commitment in business process outsourcing relationships. Information & Management, 52(1), pp.30-43.
De Weerdt, J. and Hirvonen, K., 2016. Risk sharing and internal migration. Economic development and cultural change, 65(1), pp.63-86.
Dhillon, G., Syed, R. and de Sá-Soares, F., 2017. Information security concerns in IT outsourcing: Identifying in congruence between clients and vendors. Information & Management, 54(4), pp.452-464.
Dinu, A.M., 2015. The risks and benefits of outsourcing. Knowledge Horizons. Economics, 7(2), p.103.
Durst, S., Edvardsson, I.R. and Bruns, G., 2015. Sustainable knowledge management and the outsourcing of core competences—Does that fit together? Initial insights from a literature review. In Sustainable operations management (pp. 15-35). Springer, Cham.
Gantman, S., 2017. IT outsourcing in the public sector: A literature analysis. In Global Sourcing Of Services: Strategies, Issues And Challenges (pp. 83-134).
Garba, A.B., Armarego, J., Murray, D. and Kenworthy, W., 2015. Review of the information security and privacy challenges in Bring Your Own Device (BYOD) environments. Journal of Information privacy and security, 11(1), pp.38-54.
Gorla, N. and Somers, T.M., 2014. The impact of IT outsourcing on information systems success. Information & Management, 51(3), pp.320-335.
Goyello., 2018. Outsourcing Companies . [Online] Goyello. Available at: https://blog.goyello.com/2010/11/17/tholons-top-100-outsourcing/ [Accessed on 23 April, 2018].
Gurung, A. and Prater, E., 2017. A research framework for the impact of cultural differences on IT outsourcing. In Global Sourcing Of Services: Strategies, Issues And Challenges (pp. 49-82).
Handley, S.M. and Angst, C.M., 2015. The impact of culture on the relationship between governance and opportunism in outsourcing relationships. Strategic Management Journal, 36(9), pp.1412-1434.
Kerzner, H., 2018. Project management best practices: Achieving global excellence. John Wiley & Sons.
Lahiri, S., 2016. Does outsourcing really improve firm performance? Empirical evidence and research agenda. International Journal of Management Reviews, 18(4), pp.464-497.
Oshri, I., Kotlarsky, J. and Willcocks, L.P., 2015. The Handbook of Global Outsourcing and Offshoring 3rd Edition. Springer.
Uluskan, M., Joines, J.A. and Godfrey, A.B., 2016. Comprehensive insight into supplier quality and the impact of quality strategies of suppliers on outsourcing decisions. Supply Chain Management: An International Journal, 21(1), pp.92-102.
Vining, A.R. and Globerman, S., 2017. The outsourcing decision: a strategic framework. In Global Outsourcing Strategies (pp. 27-40). Routledge.
Willcocks, L.P. and Lacity, M.C. eds., 2016. Advanced outsourcing practice: Rethinking ito, bpo and cloud services. Springer.
Worthington, S., 2015. The Provision of Financial Services by Retailers to their Customers–Is it Sustainable?. In Marketing in Transition: Scarcity, Globalism, & Sustainability (pp. 79-84). Springer, Cham.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
