The Concept of Outsourcing


Outsourcing to some is not a pleasant term but this concept is used throughout society not only in our country but the world.  Companies today are looking for ways to survive but how they accomplish this is open for discussion.  There are many products being manufactured today in the private sector and many of them have a large amount of components which must be made and installed to complete the end product.

     Outsourcing can be a good thing for the economy but it can also be a bad thing.  Companies today both large and small do not have the capacity or expertise to manufacture every component of an end product they are getting ready for sale.  This is a good thing as this need creates the need for additional jobs provided the market is good for the product being manufactured and assembled.  The key to outsourcing is choosing the resource that can provide the quality product or service in completing an end product. 

     The products of today seem to increasing today more than ever in conjunction with technology advances.  Outsourcing amounts to companies using suppliers to provide the necessary expertise and/or product to be assembled into an end product.  The supplier system in the United States and around the world creates an environment where jobs may be sustained or increased dependent upon the demand for a product or service.  How and where these jobs are located is what is creating concern over this concept.

     To begin the decision to outsource specific operations or functions must be based on sound judgment not just a cost factor though cost is an integral part of an outsourcing decision.  There is nothing wrong with this concept but when companies choose this option, it must for the right reasons. The subject of outsourcing and the decision to use this concept is different for each company. The justification and support is as different as there are products and services. It is necessary to evaluate several details or conditions before deciding to outsource operations/functions.  Outsourcing is not for everyone and companies sometimes lose something in the process when they incorporate this concept.

     The main purpose of outsourcing is in effect to reduce costs and increase profit. This is not a bad thing. Companies must make money to survive in the world economy as it is today.  While it is up to each company and their management to make the decision for outsourcing, there is an impact to the employees and the consumer when outsourcing is used.  Outsourcing for American companies is a good thing if it creates or sustains jobs in the United States but if the jobs are located in foreign countries this sometimes comes under fire in the media.  While I feel outsourcing jobs to foreign lands may be necessary in some cases, it is not always the right decision. Granted costs are involved but there are usually ways to work with employees to keep their jobs and still make a profit. Companies make a variety of products for which they do not have all the resources or talent in house to complete them for their final product. This is where the concept of outsourcing comes into play.

     One last point to make is that I am not against the concept of outsourcing but specific criteria must be established to provide a basis for the decision to outsource.  Before outsourcing the resources of a company must be examined to determine if the capability exist within the company to provide the necessary capacity and expertise.  If these conditions are not present and cannot be developed, then outsourcing may be necessary.  This is an aspect that should be examined before an outsourcing decision is made.  Granted there are many complex issues and factors involved in the manufacture of many products consumers want.  Outsourcing is not for every company but it is a necessary option for others.  Outsourcing should be used sparingly for direct control of operational performance is lost when outsourcing is utilized.  Outsourcing also creates the need for validating requirements are accomplished per contractual terms and this in effect causes an increase in cost that may not otherwise exist.      

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Comments 7 comments

rvb sarma 4 years ago

good information

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Dennis AuBuchon 4 years ago Author

Thanks for stopping by and the compliment.

Lummaya khangrah 4 years ago

Firstly i'm doubt about the concept of outsourcing when i find in my books the words they give are so strong i can understand it but when i come across this information it prove to me useful because the information language is so simple that i can understand easily.


Dennis AuBuchon profile image

Dennis AuBuchon 4 years ago Author


Thanks for the feedback. I am happy what I wrote helped you to better undersand the concept of outsourcing.

Hammad Iftikhar 4 years ago

i have lost all the ambiguaties regarding the concept of outsourcing,,,,,,,,THANKS A lot

Dennis AuBuchon profile image

Dennis AuBuchon 4 years ago Author

Thanks for stopping by and commenting.

farry 3 years ago

Would you say that this piece of information is an article??

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