Outsourcing and Off-Shoring
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This discussion was put forth in my class. Can someone assist me with the answers?
The overseas unit, as in off-shoring, is exposed to more risks (political, economic, social risks, interest groups, and intellectual property), and also higher potential profits for the firm. An overseas manufacturing or service organization will be more locally responsive in the host country but will face competitive pressures from other multi-nationals. The risk is less if the overseas unit is a captive unit for the US parent (Whirlpool in Mexico, Microsoft Research in India).
While closing dozens of plants and laying-off thousands of workers in USA may be in the interest of strategic survival of a firm, I believe US is losing crucial skills in manufacturing, technology, and management.
Does off shoring stifle domestic innovation also?
Do you believe outsourcing has now become irreversible?
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This solution discusses outsourcing and off-shoring.
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Let's take a closer look. I have also attached an informative article:
http://www.jstor.org/stable/25058762?seq=1#page_scan_tab_contents
RESPONSE:
1. Does off shoring stifle domestic innovation also?
The debate continues, but most experts would agree that it can add to innovation in the US companies, rather than stifle it, as long as risks are also considered and counteracted.
For example, part of the debate focuses on whether location matters, such as in engineering design being off-shored. For example, some argue that a connected world renders a company's location irrelevant. Others argue , however, that "proximity to clusters of innovative start ups, corporate R&D labs, universities and venture capital are the pistons that drive the engine of innovation." (www.eetimes.com/showArticle.jhtml?articleID=196513291) In fact, new models for innovation are emerging, such as the concept proposed by IBM CEO Sam Palmisano's of a "globally integrated enterprise" as the successor to the multinational ...
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