Define what is meant by outsourcing.
As a manager of an organization, you will often need to find ways to cut costs. One way to cut costs is to outsource by hiring another organization to perform the service. Consider the scenario below.
As a manager for the public outreach department, you realize that the current system for managing outreach issues is outdated. You would like to have a new outreach system developed using the Cloudera platform to help manage big data. However, no one in the organization has the expertise. You will have to outsource the project to save on costs and avoid management problems. Two companies have sent in a bid—one from Vancouver, Canada, and one from Mumbai, India. The bid from India was slightly lower than the bid from Canada. Compose a response that includes the elements listed below.
Define what is meant by outsourcing.
Explain how Peter Drucker’s statement (covered in the textbook in uCertify) about how one company’s back room is another company’s front room pertains to outsourcing. Use an example.
Summarize the management advantages, cost reduction, and risk reduction of outsourcing.
Summarize the outsourcing risks concerning control, long-term costs, and exit strategy.
Discuss which company you would outsource to and why. Does distance matter?
Your case study must be at least two pages in length (not counting the title and reference pages), and you must use at least two references as a source for your essay. See the Suggested Reading section for some sample articles on outsourcing. Be sure to cite all sources used in APA format, and format your essay in APA style.
Outsourcing is the process of hiring another organization to perform a service. Outsourcing is done to save costs, to gain expertise, and to free management time.
The father of modern management, Peter Drucker, is reputed to have said, “Your back room is someone else’s front room.” For instance, in most companies, running the cafeteria is not an essential function for business success; thus, the employee cafeteria is a “back room.” Google wants to be the worldwide leader in search and mobile computing hardware and applications, all supported by ever-increasing ad revenue. It does not want to be known for how well it runs cafeterias. Using Drucker’s sentiment, Google is better off hiring another company, one that specializes in food services, to run its cafeterias.
Because food service is some company’s “front room,” that company will be better able to provide a quality product at a fair price. Outsourcing to a food vendor will also free Google’s management from attention on the cafeteria. Food quality, chef scheduling, plastic fork acquisition, waste disposal, and so on, will all be another company’s concern. Google can focus on search, mobile computing, and advertising-revenue growth.
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