Outsourcing

Outsourcing - Outsourcing 1 Running Head Outsourcing Final Project-Outsourcing Greg Unthank Business 630 Managerial Accounting Dr Stacy Hiles April

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Outsourcing 1 Running Head: Outsourcing Final Project-Outsourcing Greg Unthank Business 630: Managerial Accounting Dr. Stacy Hiles April 4, 2011
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Outsourcing 2 Thesis Outsourcing is rapidly growing and developing in the business and with an increasing number of companies planning to outsource different aspects of business, it is vital that companies understand the benefits and risks associated with outsourcing in order to make an informed decision which will affect their business. With the competitive pressures on companies to bring new and innovative products to market at an ever rapid pace, outsourcing has made is possible for companies to compete and excel in a rapidly growing and developing market.
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Outsourcing 3 Outsourcing is the process of transferring the day to day execution and management of a business to an outside source that may provide a service at a lower rate. Two businesses, the client and the supplier enters into an agreed upon contract that outlines the duties and the responsibilities of each party. Clients agree to procure services to the supplier in the areas of human resources, facilities, real estate management, accounting, and information technology. Other areas of outsourcing that is rapidly growing among expanding organizations are customer service, telemarketing, marketing, manufacturing, designing and web development. Outsourcing is also referred to as off shoring. Off shoring is a type of outsourcing that is defined as a work performed by a buyer organization in another country. The term off shoring is slowly diminishing as globalization increases. “The globalization of outsourcing operating models has resulted in new terms such as near shoring, no shoring, and right shoring that reflect the changing mix of locations” (Engardio, et.al, 2008, paragraph 3). Even though global outsourcing is largely debated, global outsourcing continues to become a rapidly growing entity of business. In order for businesses to maintain market shares and profitability, global outsourcing is becoming a necessary business solution. Despite, criticism and skepticism outsourcing provides huge benefits in terms of cutting costs, productivity, management, and profits. The Process of Outsourcing The most important question for any company is whether to outsource management, day to day execution of an entire business function or perform it in-house. The decision to outsource generally requires board approval and is made at a strategic level. A make-buy analysis is performed to justify the decision of whether or not to outsource. The company must identify an activity that is to be outsourced and then the process can begin to establish the scope of service in choosing an outsource partner. The second step in the process of outsourcing is to secure bids for the specific commodity or service by an invitation for suppliers called a Request for Proposals (RFP). The bidding process enables a company to negotiate the ability and purchasing power with suppliers. The request process helps to bring structure to
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This note was uploaded on 07/07/2011 for the course BUS 600 taught by Professor Lee during the Spring '11 term at Troy.

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Outsourcing - Outsourcing 1 Running Head Outsourcing Final Project-Outsourcing Greg Unthank Business 630 Managerial Accounting Dr Stacy Hiles April

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