Question

QUESTION 6 Explain with examples the controversial nature of the outsource/offshore business practice.

Answer 1

The terms outsourcing and offshoring are often used interchangeably, but it’s helpful to know the difference between the two concepts. Outsourcing means using a third party to make a product or perform a service the company used to make or perform itself. When a startup or small business uses a third-party company to administer its benefits and HR, it’s outsourcing. When a consumer uses a service like TaskRabbit to hire someone to perform a service, he or she is outsourcing, too. You can outsource to U.S.-based companies or individuals. Outsourcing doesn’t have to involve foreign providers of goods and services.

Some companies do outsource to foreign countries, though. For example, a U.S. car company may manufacture cars in the U.S. which include parts made in Mexico. The manufacture of those parts was outsourced to a Mexican company. But when a company offshores, it moves some of its own operations to another country. So, if the same U.S. car company opened its own factory in Mexico it would be offshoring. If a company opened call centers in other countries it would be offshoring, too. In most U.S. political discussions, people use the term “outsourcing” to refer to either outsourcing to a foreign company or offshoring – or both.

Tasks that can be outsourced usually fall into several categories that include:

• Accounting
• Sales
• Marketing
• Design, manufacturing and production
• Copywriting, administrative tasks, and back office assistance
• Customer service
• Web development and maintenance
• … among others.

Advantages of offshore outsourcing

1. Outsourcing lets you lower costs

2. You can find people with the right skill set

3. You can offer around-the-clock customer support

4. Your business can easily scale

Disadvantages of offshore outsourcing

1. It comes with an inherent security risk

2. It can be hard to establish quality control

3. Contractors and vendors might not speak your language fluently