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Advantages and Disadvantages of Outsourcing.

I need assistance compiling enough information for a paper about "Outsourcing".

1. What are the advantages of outsourcing?

2. What are the disadvantages of outsourcing?

Discuss why these are advantages and disadvantages and to whom?

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The main reason why many companies are considering outsourcing is due to its cheap labor costs. Because company only spends less due to factors such as exchange rate, the company can concentrate on other business activities such as selling stocks at maximized prices.

Another advantage of outsourcing is that production, for example, are handled by expertise in the area. Consequently, the product will be made with the best knowledge and skills, boosting the products qualities.

When company outsources its operations and paying lower costs, the price of the final goods will be cheaper. An example is Wal-Mart. Wal-Mart is outsourcing its production and that causes reduction in the price of products. Local consumers will be able to enjoy these cheap, yet, good quality products.

Cheap labor costs are one of the advantages of outsourcing. However, these low costs bring with them challenges for our economy and our country as a whole. Kimes (2007) stated that "low cost comes with risks" (para. 4). Not only that cheap labor costs bring challenges, it is also a short-term solution. While the company enjoys its benefits from outsourcing, not every individual enjoys this move. Jenkins (2006) argued that outsourcing is not beneficial to a growing company unless it is used strategically to enhance the company's growth by cutting time.

Outsourcing will cost a lot of people their jobs. The United States economy is losing higher paying jobs at the expense of cheaper performance. U.S. white collar jobs and back office work are all at risk of being outsourced. Budman (2007) stated that 2.5 million manufacturing jobs were lost in the last 3 years due to outsourcing. Moreover, job security is compromised in related fields. Aspiring engineers fear paths such as information technology, research, and development. The interests for many fields will dwindle due to the jobs outsourced, causing us to lose our competitive edge. This is a direct reflection to the decline of the American economy, as American workers lose their jobs due to outsourcing (Lepkowski, 2007). Baily and Farrell (2007) stated that these American workers who lose their jobs have a hard time looking for a new job or end up accepting jobs with lower wages. As jobs lost, it also gives burden for the American employees to seek retraining. In addition, outsourcing is adding more risks to the American workers while they are already experiencing risks due to technology. "Automated voice-response systems are replacing call-center workers, online hotel and airline booking systems are replacing five operators and travel agents . . ." (Baily & Farrell, 2007, p. 157). As a result, there is an increase in the number of ...

Solution Summary

This solution is comprised of detailed explanation of advantages and disadvantages of outsourcing.

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