Bus 401 Mod 3 Case

1106 words 5 pages
TUI University

BUS 401

Case Study Module 3

Dr. Yi Ling

Outsourcing occurs when a company either buys products or services from outside sources or sends work to outside contractors versus doing it themselves. There are several advantages and disadvantages to outsourcing to include cost savings, sharing risk and developing better leaders internally. There are also some disadvantages like lack of quality control, loss of some management functions and losing the ability to build well rounded leaders in all aspects of the company. In a country like Iraq, the United States military is outsourcing many occupations in an effort to rebuild the Iraqi economy and eliminate the need for military presence at the same time
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I will now discuss some of the disadvantages to outsourcing. The first disadvantage is the loss in the quality control function of the product being produced. Not being on site with a quality control sections a company might be used to having, you are left with getting a product or service that may operate under less stringent standards. Another disadvantage is that a manager who once had control of a certain portion of an operation now loses their say for the most part into the part of the product or service that is sent to another contractor. Along with that, loyalty by certain employees will start to be lost because of the loss of job security. When an employee sees a number of jobs being cut and outsourced to other contractors, the feeling will be that it is just a matter of time before their job is also outsourced. The last disadvantage I want to discuss is the loss in developing technical proficiency and building strong leaders within the organization. For every service that is outsourced, that is one less area of expertise that employees have the opportunity to get engaged in. Clearly the company leadership is disadvantaged by outsourcing. As I mentioned earlier, for every job or service contracted out, the opportunity for that experience is lost. I also believe that employees won’t look at a long term stay in a company that is