CPM202 Outsourcing assignment

Introduction of outsourcing:
 Outsourcing is procedure of hiring a particular task to another organization.
 It is also called as contracting job to third party organization handling them certain type
of job and expecting of better quality with in a negotiable resources and cost.
 It is usually done for resources and economic barrier balance. Mainly when organization
faces problems in technology, human and economic resources it is essential to do
outsourcing for better generating of product.

Outsourcing can be done two ways:

Domestic outsourcing:

 This sort of outsourcing provides job to different organization with in a domestic are i.e.
within a nation or a city.
 Such outsourcing is usually done if all of requirements for production can be fulfilled
nationally and doing so cost effective and quality effectiveness issue are also fulfilled.
 Country like America, Japan they usually does domestic outsourcing although that certain
organization fulfill requirement they do so for employee contract i.e. contracting
employee for certain job is more efficient then paying him monthly wise which reduces
time, cost and give better product.

International outsourcing:

 This outsourcing is procedure of handover job by any organization to totally outsiders of

country.
 Mainly government does such kind of outsourcing. Due to lack of skilled resources and
other technology resources government uses international outsourcing.
 Such outsourcing is risky then domestic so this kind of outsourcing is done until company
every activates comes in profit balance.
 This out sourcing creates various issues in task performing so specific reason should be
conducted before doing this.

There are different types of outsourcing and some are listed below:

Business Processing Outsourcing:

 This type of outsourcing concern to corporate business procedure.

 This kind of outsourcing deals with product specification but not with technology
resources and IT resources.

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Name: Navin Singh Thapa
Id number: 1801T3090101
CPM202 Outsourcing assignment

IT Outsourcing:

 This short of outsourcing is also concern towards profit making mechanism but different
then BPO.
 This outsourcing deals technology outsourcing i.e. computer web page designing, e-
business, e-commerce etc.
 It also deals to all management resources as BPO.

Offshore Outsourcing:

 It is known as job handled to third party completely to accomplish it.

 Offshore is done for various kind of advantages i.e. lowering cost, focus in core business
etc.

Human Resource Outsourcing:

 Outsourcing human efficiency for completing job is called human resource outsourcing.
 If any company wants employee to complete some piece of task human resources is done
it is much effective in saving time and cost in project.

Customer Services outsourcing:

 Such kind of outsourcing is concern towards customers request according to costumers

requirement this outsourcing is done.

A B

Job handled to organization B by A.

C
Outsourced to organization C from B due to some reason.

Fig: Figure format of outsourcing

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Name: Navin Singh Thapa
Id number: 1801T3090101
CPM202 Outsourcing assignment

Difference between “outsourcing” and “contract out”.

a. Outsourcing
b. Contract out

Definition:

a. From above paragraph we discussed about core of outsourcing as its procedure of

providing job for third party company rather doing by organization itself.
b. But term “Contract out” is also a procedure of handling job to third party but maximum
protocol and scenario is provided by organization to third party who is going to handle
job.

Purpose:

a. Outsourcing only creates a job to third party organization and organization which have
provided an assignment they required good product result from them but nothing else.

b. In this task is performed by third party but company specifies all requirement and rules
for accomplishing task i.e. contracting human resources, technology etc. for better
productivity.

Advantage:

a. Outsourcing result is obviously a better product achievement and also for cost
effectiveness and manageable human and technology resources so it is widely used.

b. Contract out consist of contracting job for other organization similar to outsource since
third party works on rules created by contracting organization it is more efficient and
maximum probability to gain good product in effective price and time.

Dis-advantages:

a. Since out sourcing is targeted for effective price or product but if third party organization
may causes problem like crash of stock balance, lack of other require balance, leak of
information then expected thought can be converted upside down.

b. Contracting out conduct all rules for third party but handling all management
organization can face massive problem and things may not go according to plan i.e. lack
of resources, more time consuming and mores cost then predicted.

How does it function?

a. Since job is outsourced to another organization particular organization who has

outsourced job can focus upon another one which is more profitable.
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Name: Navin Singh Thapa
Id number: 1801T3090101
CPM202 Outsourcing assignment

b. Providing protocol to third party organization and assembly for another job it can be
overload for organization so contract out is less benefit then outsourcing.

Different advantages of outsourcing:

 Since outsourcing main factor is quality product but there are many advantages of it and
some of major factors are listed below:

1. Focus in core activity:

 When business is started it gets expansion and consumption of more human resources
and economic increases.
 So outsourcing helps focus core activity of organization for cause of expansion.

2. Cost and efficiency saving:

 Creating a well manageable protocol in organization is creating a problems i.e. managing
cost efficient if outsourcing is done these problems can be overcome.
 In outsourcing particular prices is implemented or fixed so this procedure creates balance
in cost no risk of managing cost.

3. Reduced overhead:
 Overhead means accessing of cost references to assumption in organization which can be
reduced by out sourcing.
 If a organization faces excess cost in overcoming any particular sector of tasks then it can
be outsourced in negation price i.e. if organization lack of some advance technology
hardware they can outsource to those organization which have got such technology rather
buying that new technology.

4. Operational control:
 This refers to control on excessive increment or consumption of price and resources of
organization.
 This can be controlled by outsourcing i.e. if organization gets lots of projects to
accomplish and gets out of control then they can outsource other project and can perform
other project by which they can access control.

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Name: Navin Singh Thapa
Id number: 1801T3090101
CPM202 Outsourcing assignment

5. Staffing flexibility:
 This process refers to contracting employee for certain kind of task.
 In company if any sort of problem arises then that can be outsource to a particular third
party employee and can be solved and job is done contract is over like this organization
faces cost effective procedure.

6. Continuity and risk management:

 When in a company if some employee leaves company then company faces irregular and
risk in management increases.
 So if outsourcing is done for such scenario can be overcome those section jobs can be
given to another employee although it takes bit time but company will achieve regularity
and will be well managed.

7. Develop internal staff:

 During performing task in company it may not have well qualified people to solve that
during that situation it requires outsourcing.
 If company doesn’t have good engineer it can outsource those employee and also
member of company can learn high skills from out resource staff.

Outsourcing allow client to focus in core business:

 It helps organization focus in core business which is one of the major advances. It helps
client organization focus on what organization is currently involved in.

Let us take an example of Dell Company how it helps focusing on core business:

Dell computer is one of best selling product company of world. It is known as

international brand worldwide known. For such kind of company outsourcing is mostly
effectible.

Dell computer core business is to produce and sell computers and electronic gadgets.
Here Dell Company has to produce a 64-bit laptop. Company also requires different
hardware for that computer. Computers assembling and software upgrading will be done in
company.

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Name: Navin Singh Thapa
Id number: 1801T3090101
CPM202 Outsourcing assignment

Comparing given scenario how is helps to organization to focus in core business:

 The core business of this company is to produce laptop computers and it is going to
manufacture 64-bit computer.
 Here, during manufacturing system company got a major problems of lack of human
resource and lack of required product.
 So outsource of these thing should be done to manufacture best product by company.
 Skill human resource can be add and required component can be gather which also
improve company skills and its core business will be definitely improved.

Hence, here from Dell Company outsourcing is helping to focus in core business and
improve it. From the above given scenario shows how outsourcing helps improving company
core business.

5. Some demerit of outsourcing:

Since outsourcing has lot of advantages but it has got some of demerit also some of them
are listed below:

a. Loss in managerial control:

 This is one of case of outsourcing when any company they outsource their management
policy to other company.
 During this procedure outsourced company will handle all the managerial issue of that
particular organization.
 During this that outsourced company can use that company only for profit, they can
conduct any sort of job which will hamper those company who has outsourced.

b. Hidden cost:
 When an organization contracts for the outsourcing purpose they will have some
authorized deal.
 But some cases outsourced organization may cover facts of project going on i.e.
economic management.
 So lack of such information creates overload to organization and have to spend excessive
amount of resources which is major disadvantages.

c. Threat to confidentiality and security:

 Information is major factor for implementing system or organization business.

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Name: Navin Singh Thapa
Id number: 1801T3090101
CPM202 Outsourcing assignment

 If security or confidentiality of organization is leaked it has to bear a lot of issues

according to form of information.
 Information i.e. formula, employee records, economic stats must be kept confidential or if
it has to leak should predict price for that.
 So during outsourcing if these points are not concern organization may face great
negative impact which is one of is disadvantage of outsourcing.

d. Quality problem:
 Mainly outsourcing is focused in profit.
 So during this organization tries to complete project in less cost than cost that is in
contract which gives profit to outsourced organization.
 While doing such tasks quality of product gets poor which is next disadvantage of it.

e. Tied of financial well-being of another:

 During outsourcing one organization hands over business to other organization.
 During this if organization gets lack of finance organization who has given outsourcing
can face issue in economics status.

f. Bad policy and ill-will:

 This factor is related to publicity status.
 If outsourcing is done and many of employee gets job then it is consider as good and if
lot of employee has to go out of country or local areas it is consider a bad publicity for
outsourcing.

Different forms of outsourcing:

Outsourcing has different kinds of forms and some are listed below:

1. Consultants:
2. Personal service contracts:
3. Suppliers of parts of materials:
4. Organization supplies of specialized services:

Here taking all these form to solve one scenario of IBM company:

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Name: Navin Singh Thapa
Id number: 1801T3090101
CPM202 Outsourcing assignment

IBM company produces lots of IT devices and computers manufacturing company.

It has to produce lots of products as demanded. Manufacturing huge amount of products

requires skill man power in many numbers. During material production company is also
concern towards finance status. Produces 500 product in one day and distribution of products
worldwide.

Hence from above scenario it says that IBM company is facing problems that has to be
solved.

Solution:

 IBM company produces lots of IT and computer gadgets.

 Since it is large company it requires lot of effort of it to fulfill requested requirement.
 To fulfill update it requires various forms of outsourcing.
 First problem is for lacking of skill full person.
 This issue can be overcome by constants form of outsourcing.
 This form refers to hiring people according to need to organization.
 Hiring particular skilled person according to requirement which is also a cost
effective.
 Personal services contract also can be beneficial i.e. examining group of people and
sorting out only the efficient one.
 Company is facing components problem for this process to overcome by supplying
parts from outsourcing.
 In this outsourcing inserted of manufacture parts by company if materials are
outsourced towards company it will be cheaper and quality of product increases.
 Since to increase more product selling rate company must provide special service to
organization or to vender customer.
 Only manufacturing products are worthless.

So these are forms outsourcing used for solving IBM issue. So different forms of
outsourcing are used to solve different problem in company.

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Name: Navin Singh Thapa
Id number: 1801T3090101
CPM202 Outsourcing assignment

Privacy and confidentiality is often cited and major barrier to

outsourcing IT functions:
One of major question raised for outsourcing technique is “Is it secure to do
outsourcing?” and “Does company management stays private and maintainable during
outsourcing?”. These are question raised and it has its own answer during implementing
outsourcing in IT Company or any other company outsourcing plays vital role in keeping
company privacy secure.

 Outsourcing not only used for beneficial profitable priority.

 Outsourcing also concern towards information gathering. This process helps to
know that what is upcoming organization status is as such kind of contracts and
deals will be made which protects privacy of certain company.
 Due to information gathering outsourcing provides more feedback comes from
different source as more feedback arise more beneficial for privacy maintain.
 During outsourcing company gets more conscious securing data and information
of company which also increase probability of information being secure.
 During the outsourcing contracting issue are conduced which prevent data privacy
to get explore.
 In IT Company many information handling and processing is performed so for
privacy and security information outsourcing is needed.

Since these are factors that makes business concern towards privacy on outsourcing. Now
what will be consequences if privacy factor is not taken as major one:

1. Impact of loss:
 Due to loss of privacy in outsourcing it can impact on radar of business variation.
 Conducting lack of privacy during outsourcing it causes leak of economic
information and casus loss in transaction.
 Billing report of company during outsourcing also causes many demerits and
loses.

2. Impact of duplicity:
 Lack of privacy during outsourcing also contains duplication of product in
market.
 If any company makes product and during outsourcing of product it leaks its
privacy then other company may make same kind of product that can hamper
business of company who has produced genuine product.
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Name: Navin Singh Thapa
Id number: 1801T3090101
CPM202 Outsourcing assignment

 This method can create great loss in business transaction so privacy is required.

3. Impact on information:
 Leaking privacy of information during outsourcing also can create great
destruction in business.
 Information leaking can create miscalculation of ledgers, wrong records,
corrupted data every scenario can be misplaced if any third party get information
of outsourced company.

4. Impact on management:
 Hence after all these demerits of leaking privacy during outsourcing all these
elements shows direct impact upon company.
 All of these errors create massive misplacement in management sector.
 All management scenario can be disturbed things may not go according to plan
and consequences can be worse.

So privacy in outsourcing is most important it should be regularly followed and hence it

can also conduct some of privacy maintain techniques. So it cited as major barrier in
outsourcing.

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Name: Navin Singh Thapa
Id number: 1801T3090101
CPM202 Outsourcing assignment

References:
www.About.com

Author: James Bucki

11
Name: Navin Singh Thapa
Id number: 1801T3090101