Explain, compare, and contrast the “advantages and disadvantages to outsourcing project work.”
Please be thorough and complete in your response. Your document should be a minimum of 850 words.
Your document will be in APA format using parenthetical citations to the textbook as well as two (02) other authoritative resources. Provide a References list at the end of your discussion board post. List all three (03) resources used in correct APA format
MAIN RESOURCE:
The term outsourcing has traditionally been applied to the transferring of business functions or processes (e.g., customer support, IT, accounting) to other, often foreign companies. For example, when you call your Internet provider to solve a technical problem you are likely to talk to a technician in Bangalore, India, or Bucharest, Romania. Outsourcing is now being applied to contracting significant chunks of project work. For example, Apple and Motorola work closely with manufacturers in China to develop next-generation smartphones. Toyota and DaimlerChrysler collaborate with suppliers to develop new automobile platforms.
The shift toward outsourcing is readily apparent in the film industry. During the golden era of Hollywood, huge, vertically integrated corporations made movies. Studios such as MGM, Warner Brothers, and 20th Century–Fox owned large movie lots and employed thousands of full-time specialists—set designers, camera people, film editors, and directors. Star actors like Humphrey Bogart and Marilyn Monroe were signed to exclusive studio contracts for a set number of films (e.g., six films over three years). Today, most movies are made by a collection of individuals and small companies who come together to make films project-by-project. This structure allows risks to be shared and each project to be staffed with the best available talent rather than only studio employees. This same approach is being applied to the creation of new products and services.
Many outsourced projects operate in a virtual environment in which people are linked by computers, faxes, computer-aided design systems, and video teleconferencing. They rarely, if ever, see one another face-to-face. On other projects, participants from different organizations work closely together, for example, at a construction site or in shared office space. In either case, people come and go as services are needed, much as in a matrix structure, but they are not formal members of one organization, just technical experts who form a temporary alliance with an organization, fulfill their contractual obligations, and then move on to the next project.
The advantages of outsourcing project work are many:Many outsourced projects operate in a virtual environment in which people are linked by computers, faxes, computer-aided design systems, and video teleconferencing. They rarely, if ever, see one another face-to-face. On other projects, participants from different organizations work closely together, for example, at a construction site or in shared office space. In either case, people come and go as services are needed, much as in a matrix structure, but they are not formal members of one organization, just technical experts who form a temporary alliance with an organization, fulfill their contractual obligations, and then move on to the next project.
The advantages of outsourcing project work are many:
Cost reduction. Companies can secure competitive prices for contracted services, especially if the work can be outsourced offshore. Furthermore, overhead costs are dramatically cut, since the company no longer has to internally maintain the contracted services.
Faster project completion. Not only can work be done more cheaply, but it can also be done faster. Competitive pricing means more resources for the dollar. For example, three Indian software engineers can be hired for the price of one American software engineer. Furthermore, outsourcing can provide access to equipment that can accelerate completion of project tasks. For example, by contracting a backhoe operator you are able to accomplish in four hours what it would take a landscaping crew four days to complete.
High level of expertise. A company no longer has to keep up with technological advances. Instead, it can focus on developing its core competencies and hire firms with the know-how to work on relevant segments of the project. This can lead to significant improvements in the quality of the work performed.
Flexibility. Organizations are no longer constrained by their own resources but can pursue a wide range of projects by combining their resources with the talents of other companies. Small companies can instantly go global by working with foreign partners.
The disadvantages of outsourcing project work are less well documented:
Coordination breakdowns. Coordination of professionals from different organizations can be challenging, especially if the project work requires close collaboration and mutual adjustment. Breakdowns are exacerbated by physical separation with people working in different buildings and different cities, if not different countries.
Loss of control. There is potential loss of control over the project. The core team depends on other organizations that they have no direct authority over. While long-term survival of participating organizations depends on performance, a project may falter when one partner fails to deliver.
Conflict. Projects are more prone to interpersonal conflict, since the different participants do not share the same values, priorities, and culture. Trust, which is page 439essential to project success, can be difficult to forge when interactions are limited and people come from different organizations.
Security issues. Depending on the nature of the project, trade and business secrets may be revealed. This can be problematic if the contractor also works for your competitor. Confidentiality is another concern and companies have to be very careful when outsourcing processes like payroll, medical transcriptions, and insurance information.
Political hot potato. Foreign outsourcing of work is perceived as a major cause of underemployment and U.S. companies are under increased pressure to keep jobs local. Furthermore, companies like Apple have been criticized for the oppressive labor practices of some of their suppliers in China.