GLOBALIZATION AND OUTSOURCING

Impact of Globalization on Organisational Networks, Structures and the Role of Outsourcing

Impact of Globalization on Organisational Networks, Structures and the Role of Outsourcing

Introduction

The purpose of this paper is to enlighten and explore outsourcing in holistic manner. The paper will focus of diverse dimensions of outsourcing describe the relation between globalization and outsourcing; moreover, the paper discusses the impact of outsourcing on organisational structure. In addition, the paper will explore the advantages and disadvantages of outsourcing along with its types. Outsourcing is the process that is beneficial in some cases and reveals negative results in others. Hence the paper will present the advantages and disadvantages of outsourcing with the practical example of its success and failure in multinationals in order to understand its importance in the era of globalization.

Outsourcing originated in the 1980s, when the Fordist system of mass production entered a worldwide crisis. Allen Scott and Michael Storper, working on industrial change in California, described the emergence of tightly interconnected networks of small firms in place of the previously integrated large businesses. Without using outsourcing, researchers have been able to describe a regional pattern of firms that adopt outsourcing to spread risk and contain costs. These early works introduced a spatial component in the analysis of outsourcing. The concentration providers for outsourcing services in certain regions allow an easier and more efficient coordination of the production processes.

In recent years, it has been analyzed that there are economic and socio-cultural consequences of outsourcing. These consequences include (a) the Global Value Chains (GVC) Initiative, (b) the work on Global Production Networks (GPN), and (c) within the discipline. Outsourcing involves good and close relations between all stakeholders to coordinate all operations to achieve the desired results. For example, the construction contract is concluded between the actual client and the contractor. In an outsourcing contract, there is an outsourcing contractor and the subcontractor. The various parties have obligations towards each other and are interdependent. Small and medium size businesses use outsourcing because it is less time consuming and less difficult. In this way, companies can focus more on the important core functions of the company. Before outsourcing, a company has to keep in mind some tips for making the decision: First, the company must make sure that the outsourcing company is reliable and dependable. The company must check on the qualifications of the staff and the references provided by the outsourcing company. Second, the company must be clear about its expectations to the outsourcing company.

Outsourcing Defined

Outsourcing can be defined as subcontracting a production process to a third-party company. As a result of outsourcing, firms move entire business functions to external service providers. Outsourcing can significantly increase the efficiency of a company and give it the ability to attract almost any staff to implement a wide range of services necessary for the business during that time. Outsourcing is a practice which is being carried out by large companies. The purpose of ??outsourcing is to reduce the cost of the processes significantly as the ...