This website uses cookies to ensure you have the best experience. Learn more

Outsourcing To China Essay

1514 words - 7 pages

What are the pros and cons of outsourcing to China?

The Objective is to explore key factors and pros and cons in outsourcing to China. Research findings identify obstacles faced by both parties in outsourcing. Economic factors are motivational factors in outsourcing to China. Cost reduction, savings, and investment reductions are the main concerns. Benefits focus on core competence, flexibility, and market penetration. Companies in China have ran across several obstacles such as poor communication and lack of preparation.
Common Approaches
There appears to be three commonly used approaches to outsourcing decisions (as also noted by Bolumole et al. 2007): transaction ...view middle of the document...

Service Provider Relationships
There are different relationships involving outsourcing such as efficiency relationships, enhancement relationships, and transformation relationships. Efficiency relationships are focused on reduction of cost while improving service delivery. Efficiency is effective by continuous process improvement. Enhancement relationships focus on being effective however, the main goal is to reach productivity improvements. They incorporate business process which makes them broader than efficiency relationships. Process improvement and re-engineering are the key focusing areas. Transformation relationships are focused on competitive advantage positioning. These relationships are less common and characterized by major innovation and new services. Business issues are the main focus and not operational issues. Managers have to figure out what their specific business needs are and understand what the required services are.
Preventive Issues
Sometimes originations half way through their outsourcing relationship realize their conditions are insufficient. They failed to develop the proper legal outsourcing contracts. The organization then has to wait for the contract to expire in order to correct the issues. Then they have to renegotiate issues to bring new services. To prevent this management should review the contract before signing. It is important to look over the terms and conditions. It would also be a good idea to have a third party give advice. In China a common issue with outsourcing contracts involves the SLAs with inadequate terms and penalty articles. The management team fails to realize the SLAs they agreed to do not meet their business needs. Managers accepting standards by their provider do not spend enough time reviewing the levels of service. It would behoove them to analyze their business processes so they can identify performance indicators. They should consider using a third party to handle issues between the company and service provider. In case the worse were to happen a letter of intent to terminate should be discussed.
Many companies outsource to china for many different reasons such as low rates, large pool of qualified candidates, excellent work ethics, flexibility, and well organized. By outsourcing to china a company could save 67%. A senior software engineer only makes US$21,800 based on one to four years experience. Inflation is rising in China and will increase the cost of goods. One the major advantages China has is its low cost. The Chinese labor Pool is excellent for outsourcing. The reason is that the delivery flexibility refers to the ability
of the system to shorten or lengthen its delivery lead time (Slack 1983) China was ranked 89th out of 169 countries by the Human Development Index. China has low cost and a large labor force.
“The reasons for locating facilities at a supplier park are: to enable sequential just-in-time deliveries(Larsson 2002); to increase...

Other Papers Like Outsourcing to China

Small Business Management Essay

3116 words - 13 pages different countries for production (Dubois, 2008). While many of Boeing’s planes are still manufactured within the Boeing manufacturing facility in Everett, WA; the vast majority of the parts that are used to build the planes come from elsewhere in the world such as France, China, and England. Airbus has a similar outsourcing program, with over 50% of the new A380, the new double decker jumbo jet, being outsourced to other countries (Dubois

Outsourcing Jobs May Lead to a Weakened Economy

1072 words - 5 pages outsourcing to foreign countries has become an issue of major concern of all representations of the common people all over the world. Specifically, in America, outsourcing of American jobs has become a big topic. Many jobs are being outsourced to other countries, like China, India, resulting in job scarcity and leaving the American population unemployed. Outsourcing refers to the practice of contracting with third companies or vendors outside


1888 words - 8 pages expense can affect the profitability of any venture. Workplace Scenarios Paper Converting Machine Co. was drastically affected by the recession. Outsourcing has become a savior to the company. The company’s sales had plummeted 40%. They decided to outsource production to China. This allowed them to cut costs substantially and in turn prevent the company from going under during recession. Although the company is thriving, American workers have

Hr Research Paper

3178 words - 13 pages, outsourcing first refers in Adam Smith’s The Wealth of Nations in 1776 as a method to cut down cost by hiring cheaper labor in less developed countries. It is not until the 1970’s that companies began to outsource their business offshore, to third world countries in particular, India and China. The booming growth and development of IT (information technology) and .com companies find it easy than ever to do business abroad. Gartner Inc

Global Trends: Manufacturing and Outsourcing

1102 words - 5 pages , whether for goods or services, many companies downsize their work force. This creates a loss of jobs for the American industries while increasing jobs in places such as China, India and Indonesia, just to mention a few. Outsourcing, undoubtedly has its comparative advantages as far as having lower wages but it also has risks such as rising costs and trade barriers. It is some of these challenges that is believed to have created a slow re-routing

Web Assignemnt 1

649 words - 3 pages manufacturing company closes his factory in Canton, Ohio and opens a new one in Canton, China. According to Friedman, this is an example of: a. Outsourcing b. Offshoring c. Insourcing d. Open-Sourcing 6. Friedman argues that 11/9 is a critical date in the history of globalization. Why? a. Friedman is dyslexic; terrorists struck the Twin Towers in New York on 9/11 - not 11/9 b. The Berlin Wall fell on 11/9/89, symbolizing the end of

Outsourcing Jobs to Low Wage Countries

3025 words - 13 pages the practice became fashionable during the period of economic boom in the mid 1990’s. During this time, the outlook of the practice remained relatively unchanged, though this seems to be changing. For instance, firms that deal with outsourcing are starting to consolidate, resulting in larger providers who offer a wider range of services. Niche providers are also coming forth. Additionally, developing nations such as China and India are in direct

Legal Process Outsourcing

4593 words - 19 pages outsourcing). However, at present India is the largest LPO destination. Like the U.S and U.K., India’s legal system is grounded in British common law. And, unlike China, which is emerging as off shoring center, English is the language of instruction in Indian colleges and law schools. India also boasts one of the largest pools of English-speaking graduates in the world. Labour cost is another major factor in sourcing work to India. In addition, India

Knowldge Process Outsourcing

4065 words - 17 pages performed. In the Philippines there are a lot of KPO companies that belongs to the Captive Outsourcing Category. In the financial services sectors, the top players in the country that uses Captive Outsourcing KPO are Thomson Reuters, Bloomberg, Macquarie, Deutsche bank and JP Morgan to name a few. Currently the Philippines is in the top 5 KPO destinations however, the country is still behind compared to India, China and Israel, which are in

Outsourcing - Nike, Inc

843 words - 4 pages to others in order to concentrate on a core product or service can be the most sound strategy to employ. Even as Nike was selling off these subsidiaries in order to concentrate on its core product, they still used outsourcing in order to exercise cost reduction. Nike manufactures their shoes and apparel in other countries such as Indonesia, China, Taiwan, India, Thailand, Vietnam, Pakistan, Philippines, and Malaysia. In fact, the cost savings


571 words - 3 pages outsourcing and globalization. In the earlier days of the technology revolution, corporations realized that a lot of work could be done overseas for cheaper. Anything and everything that could possibly be done in a low labor market was outsourced. Americans would lose their jobs because it would be passed over to China or other low labor markets. Much like in America, many European workers/countries also struggle with globalization and

Related Essays

Acer Group’s R&D Strategy – The China Decision Strategic Outsourcing At Bharti Airtel Limited

731 words - 3 pages Acer Group’s R&D Strategy – The China decision Strategic Outsourcing at Bharti Airtel Limited “The concept of absolute cost advantage leads us to believe that successful firms ultimately locate in the lowest cost environment (or country) for their business. Compare the Acer and Bharti Airtel cases (and relevant materials) to either agree or disagree with this view.” I disagree with this statement as we can see in both cases for Acer

Case Study Finish Companies Outsourcing In China

1768 words - 8 pages CASE A Situation analysis A Finnish company specializing in sports clothes, working closely with athletes and sports clubs, has five suppliers in China after changing them from Estonian ones. Thanks to the friend of the owner of the company, it was easier to start collaborating with Chinese. The company has one employee in china who checks the cloth’s quality once a week. Identification of main issues and problems The company has still many

Outsourcing Essay

2329 words - 10 pages Timmy Throntveit Organizational Theory September 21, 2014 Research Paper: Outsourcing Outsourcing is the practice used by different companies to reduce costs by transferring portions of work to outside suppliers rather than completing it internally (Investopedia). Why do many organizations outsource their business overseas to countries like China or India? Outsourcing is an effective cost-saving technique when used properly. Outsourcing

Global Outsourcing Essay

1294 words - 6 pages advantage that there is a ample supply of skilled professional labor willing to work for less with a faster rate of production and greater efficiency. (Business Weekly 2006) References ADPT Services. 2009. Pros and Cons of Outsourcing. Pro Log Artimovich, I. (2008). Weak Dollar Hits Outsourcing to India, China and Others. http