Examples of Outsourcing

Outsourcing transfers some of what are traditional internal activities and resources of a firm to

outside vendors, making it slightly different from the traditional make-or-buy decision.

Outsourcing is part of the continuing trend toward utilizing the efficiency that comes with

specialization. The vendor performing the outsourced service is an expert in that particular

speciality. This leaves the outsourcing firm to focus on its critical success factors, that is, is

core competencies that yield a competitive advantage. With regards to real-life applications of

outsourcing, it can be both beneficial and detrimental at the same time—per the following

examples.

Bad Example: CIBC

In 2017, CIBC eliminated 130 jobs in its finance department CIBC is eliminating up to 130 jobs

in its Toronto finance department and outsourcing the work to India. As part of the transition,

staff losing their positions must train other local CIBC employees. Those employees then train

the workers in India who will be taking over the jobs. This move was amid a recent record-

breaking profit of $1.4 billion, with staff feeling full of depression and indignation, and CIBC

seemingly showing no remorse over this course of action.

Bad Example: RBC

In 2013, RBC eliminated dozens of positions in favour of foreign temporary workers, who were

in Canada to take over their work. As an insult to injury, like in the case of RBC, the (current) to

be displaced workers must train their much less educated (and arguable inferior) replacements.

This, once again like in CIBC’s case, was in the wake of record profits, and such a move is an

act of utter betrayal, as these very employees put their blood, sweat and tears into those

profits. To make matters worse, “iGATE Corp”, the offshore Indian firm, doesn’t provide any

value to the current business processes as they lack a considerable amount of skill and
experience in the IT domain. Ultimately, efficiency is not improved as the lower degree of

competency offsets the decrease in expenditure.

Good Example: Google

As one of the top companies that prides itself as a champion of its workers, and organizational

culture, it seems odd to talk about Google even conceiving of outsourcing efforts. For many

years, the Mountain View firm has been taking advantage of outsourced staff for years.

Whether it was a matter of IT specialists, developers, as well as virtual assistant types of work,

Google is a strong implementer of outsourced work to take care of the many projects they

continuously deploy and work on. One notable instance of outsourcing was to outsource

phone and email support for Adwords to around 1000 representatives, offshore. Adwords is

one of their top-grossing products, thus they wanted increase ROI and free-up more skilled

staff to take on more demanding tasks as opposed to more laborious, routine tasks.

Good Example: Alibaba

Alibaba, known as China’s “Ebay”, is home to one of the largest (if not the biggest) online

marketplaces, in the world. According to Jack Ma, the man at the helm of the company,

outsourced software development to a U.S. company. At the time, development talent in China

was sparse, while developers in U.S. had the skills Alibaba was looking for and needed. Once

again, Ali Baba is an excellent example in that they utilize resources abroad to improve

efficiency to a great degree, while minimizing cost—all key (also intended) benefits that

outsourcing ought to bring.