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Difference between Offshoring and Partnering

Introduction

A recent report by Watson Wyatt (2006) found that offshoring may have positive effects on production costs and operational efficiency, but there is minimal evidence of positive effects on customer service, satisfaction, human resources costs, marketplace image, and home country morale. Of major interest in this unit is another finding that showed that over 92 percent of the managers are local hires and that 39 percent approached their initial relocation with a third party. In addition, 79 percent of the respondents cited labor cost savings as the formal measure of their offshoring effectiveness.

In this task:

Prepare a one-page review for an industry executive, which recommends a set of standards for developing relationships with the host countries by answering these questions:

- Put these findings together and assess whether you think they support a strong relationship between the corporation and its workforce.

- Do you think they give you any hints about what should be the criteria for measuring a sustainable relationship? Explain.

- Is cost savings alone the answer in business effectiveness? How so or how not?

In addition, consider the sub-industry you chose previously, (Coffee manufacturing: see attachment):

- What criteria would you draft for developing a sustainable relationship operating in a country outside of the U.S.?

- Are there any examples that support the findings presented in the Watson Wyatt report on offshoring?

- Are there any examples that refute the study's findings?

Watson Wyatt Worldwide. (2009). http://www.towerswatson.com/

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Solution Preview

Prepare a one-page review for an industry executive, which recommends a set of standards for developing relationships with the host countries by answering these questions:

- Put these findings together and assess whether you think they support a strong relationship between the corporation and its workforce.

When analyzing the collective data from the Watson Wyatt studies, it demonstrates a growing trend in offshoring over the past two decades with the predominant focus of successful offshoring being measured in overall labor cost efficiency gains or losses (Watson Wyatt, 2009). This practice of offshoring for more streamlined labor costs and savings is often correlated with job losses back in the home country and this can negatively impact the overall morale of the organization if careful measures are not put in place to help ease the workers concerns. Therefore it can be assumed that this action does not always support a strong relationship between the corporation and its workforce (Watson Wyatt, 2009). I believe that a company who focuses too closely on cost reduction does not effectively support the overall best interest of the organization.

- Do you think they give you any hints about what should be the criteria for measuring a sustainable relationship? Explain.

In reviewing the data and the studies ...

Solution Summary

When analyzing the collective data from the Watson Wyatt studies, it demonstrates a growing trend in offshoring over the past two decades with the predominant focus of successful offshoring being measured in overall labor cost efficiency gains or losses (Watson Wyatt, 2009).

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