Many years ago companies used to buy other companies to extend their conglomerates which mean a large company can be formed by joining together different firms. Actually these companies or smaller firms which they used to buy were related to their business and most often they were the supplying companies. Then these conglomerates also started buying other firms which were not related to their business in order to get maximum profits and also to be the biggest among all the companies.
They also discovered that they could even drop their core functions by hiring other companies that could the job more effectively, at a lesser cost. Like this payroll processing was subcontracted, shipping was framed out and also manufacturing companies outsource collections and on the other side customer call centers and R & D started to evolve. This process of giving companies work to other companies is called as outsourcing. For example in many educational institutes the canteens, stationary etc, are outsourced since the persons having experience in those respective fields can do the work better than the owners of the institutes and they can concentrate on core business which is the maintenance of their institution.
[...] In 1980's along with payrolls, accounting services, payroll, billing, and word processing all became outsourced work. In the recent past outsourcing has moved into IT industry, data transcriptions, R & D and call center operations. Reasons for outsourcing or off shoring: Outsourcing or off shoring is the most powerful way for a firm to reduce costs, extend the scope of customer services, time-to-market and be better capital to focus on the core competencies of the company. In European countries like Germany outsourcing or off shoring will create flexibility at the time of fluctuations in demand. [...]
[...] changes may be good control over the project, prior budget and schedule variation analysis, documentation of customer and vendor roles and responsibilities and change in plan that is made to estimate the time and cost. Next the accounting and budgeting process used today were not designed with outsourcing kept in mind so the companies entire accounting software must be modified. For this reason the organizations are redesigning their process to have more accurate time accounting to improve quality and productivity. [...]
[...] d)Others: Other important features to be considered before finalizing your offshore outsourcing vendor include company track record, employee profiles, number of years in business, scalability of services, certifications & accolades, and commitment to relationship. Also, before signing the deal, make a personal visit to the organization to see the actual business. Maintaining customer/vendor relationship: There should be good relationship between company and customer/vendor. This will assure the customer that they are receiving appropriate services and products from the vendor as contracted before and from the vendor's point of view, it should help us mange quality, costs and productivity which are very important for successful relation. [...]
[...] example companies in South-east US closed mills and factories because they shifted their textile manufacturing operations to China and South-east Asia and many of the hard goods manufacturing plants were moved to Central America and Indochina. US companies extended off shoring to include white-collar jobs, they off shored professional and technical jobs to save money. For example many of the big companies transferred their, call centers to India, where labor rates are as low as 50-80% lower than US rates. [...]
[...] Obama and American policies: Because of economical down fall in US Obama taught to reduce outsourcing to eradicate unemployment for the green card holders of US to do this he has proposed the removal of tax benefits for companies that outsourced their work to off shored continents. This stopped many of US companies to send the jobs overseas so there is a decline amount of off shoring. Case Present Scenario of global recession will drive in more business to India. [...]
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