Music Online: Charlie Smith

Outsourcing

Outsourcing – This is when a company uses sources from outside of the business to undertake functions that used to be done internally by a section of the business itself.

Outsourcing is a process that is contracted between the business and the supplier which outlines the agreement of their services.
There are many reasons for a firm to consider outsourcing. Perhaps the most common of these is to save money. Outsourcing saves money because wages abroad, in developing countries, are considerably less than that in the UK or other industrialised countries. Other reasons include; gaining knowledge from other sources, improving quality and saving time.

Issues with Outsourcing

Some of the main problems with outsourcing include:

Quality Control
A major problem that can arise when outsourcing is the quality of service that is provided. There are different quality control methods within different countries, and therefore the quality of the product or service may be lower. In developing countries, suppliers may not be of the same standard as they are in industrialised countries and therefore this can create a lower quality end product.
A way of ensuring that quality is of the same standard as it was before outsourcing, the business can create a service level agreement (SLA) contract which defines what quality should be in place.

Language
Another issue with outsourcing can be the language barrier. This problem can be increased when there are also culture issues, when outsourcing to countries who have opposite cultures to ours.

Qualifications of the outsourced workforce
When outsourcing, it is possible that the new staff that are employed have fewer qualifications than those before them.

Social Responsibility
Outsourcing can be seen as socially irresponsible as some people believe, that as outsourcing is often done in low-income communities, the companies are exploiting lower paid workers.

Thomas L Friedman – The World is Flat

‘The World is Flat’, is a book written by Thomas L Friedman. The basic message of the book is that all companies have equall oportunities due to flatteners. These flatteners have ‘levelled the playing field’. In all, there are 10 flatterners, one of which is outsourcing.
According to Friedman, outsourcing has helped flatten the world, because it has enabled companies to subcontract to areas that have the most efficient and cost effective way.