Reduced Cost from Outsourcing - 2057 Words

Reduced Costs from Outsourcing One of the main reasons companies will consider outsourcing is the overall reduced costs. Outsourcing provides a more efficient approach in controlling operating costs. Costs per additional employee include salary, overhead, equipment/software, training/education, other supplies, and possibly facility costs (Sood, 2005). Another cost savings quality is in overall Human Resources, as outsourcing eliminates costs for future development of employees, current trainings, recruitment, payroll and benefits. There are many markets that are able to reduce operating expense and cost of goods sold through outsourcing. Highlighted in this paper will be IT, electronics, the automobile industry, and customer services.†¦show more content†¦Many automobile manufacturers and original equipment manufacturers (OEM’s) of auto parts are seeing the cost savings of offshore outsourcing. The savings for design and engineering services are as high as 40%- 50%, mainly due to the lower co st of engineers. Another factor is that the domestic firms are more specialized. This specialization makes domestic firms relatively expensive, although auto companies often domestically outsource high-end work to these firms. Conversely, design and engineering firms in India offer a wide range of services, and are ideal for lower-end design work. (Value notes Database, 2006). A study to analyze automotive design engineering in India was organized by the Society of Motor Manufacturers and Traders (SMMT). It found a considerable salary gap with salaries in India 20 to 30% of European Union levels, which are similar to the wages earned in the United States (Shelley, 2006). Now the world’s large automakers are starting to take advantage of these low wages in India, and also China. Offshore outsourcing may be a risk, but future trends may require it. Overcapacity and stiff competition have held auto prices down for about a decade. But during that period, automakers have upgraded standard equipment. To remain competitive, component costs must be reduced by as much as 30% over the next decade. Analysis suggests that, as a result, offshoreShow MoreRelatedOutsourcing Is An Important Tool That Organization959 Words   |  4 PagesOutsourcing has become an important tool that organization are taking advantage of more in this age of technology. It allows for a company or organization to select a partner or source to move a portion of their business to that usually has expertise in that area. It is a option that is being utilized by organizations in many countries. Outsourcing is a tool that enables organizations to gain some levels or competitive edge in their industries. It also allows organizations to obtain some priceRead MoreOutsourcing to Meet Customer N eeds663 Words   |  3 PagesThere’s a few method that can be implement in D’Herbs to overcome challenges they faced. One of the most critical methods is by outsourcing. By outsourcing, they could just focus only in creating better products to meets customer needs. Where, other departments in the company are outsourced. Company gained competitive advantages through real or actual value to customers that they provided. The organizations must know their products, services, customers, competitors, industry, related industries,Read MoreInternal External Sourcing Strategies Paper1344 Words   |  6 Pagesquality, low cost, on-time delivery, and satisfactory cooperation and from suppliers. The two main key factors that drive the decision to source internally or outsource is driven by the supply base structure and in customer to supplier relationships. Outsourcing since has become a more favored approach for most organizations. Studies show that last year companies within the United States spent about $29 billion on outsourcing services or products (Thomas, 2009). It’s obvious that outsourcing has becomeRead MoreMarkrting Managemeny1064 Words   |  5 Pagesimprovements that can be made. Answer - operating structure of cyclone furniture has three broad categories: 1. Domestic furniture 2. Export furniture 3. Office furniture Each section has its own dedicated setup. Semi-finished furniture from these dedicated setups moves to single furnishing unit where activities like staining and polishing are performed by specialists. However, workers in three manufacturing units are interchangeable. STRUCTURE DIAGRAM OF CYCLONE FURNITURE /-- DomesticRead MoreThe Original Tonka Truck Manufacturer1413 Words   |  6 PagesStreater Industries, Inc., another local manufacturer, Mound Metalcraft, Incorporated was offered the opportunity to manufacture steel toys, as envisioned by Edward C. Streater, son of L.E. Streater. Tooling for two pressed steel toys was soon purchased from Streater Industries that would become Tonka s model #100 Steam Shovel and #150 Crane and Clam. To learn more about Streater Industries and their steel steam shovel, and Tonka Toys was on the map. Following the introduction#150 Crane and Clam of theRead MoreOutsourcing HR: Assignment Instructions1175 Words   |  5 Pagesrelative costs and impact on your HR department and the amount of control you require your HR managers to exert over these functions. Step 2 Single out any function that can be completed with limited or no supervision. Understand, if you hire an independent contractor to perform these functions for your company, you will be able to dictate only the results you wish to achieve. How to complete the tasks for you will be the prerogative of the contractor. Step 3 Evaluate the costs and benefitsRead MoreEssay about The Lego Case1001 Words   |  5 Pagesmain expectations and learnings from the relationship with the Flextronics? Expectations: a. Saving cost by outsourcing to low-cost countries: Prior to outsourcing, LEGO owned and operated production plants mainly in relatively high labor-cost countries, such as the United States, Switzerland and the South Korea. The main reason for this is that LEGO built plants close to its main markets to save transportation cost. But LEGO finally realized that the reduced labor cost in some labor-intensive countriesRead MoreAnz Introduction1227 Words   |  5 Pagessecurity risk as a consequence of ANZ Bank recent outsourcing strategy. This report discusses three main issues that ANZ Bank’s management may have to consider if it is to enhance strength and core competency. Customer value proposition Firstly, as ANZ Bank has stressed that ‘becomes a super regional bank’ is a core strategy objective (ANZ 2012), ANZ will have to consider the potential effect for customer value proposition as a result of recent outsourcing strategy. It has been pointed that the problemRead MoreAirtel Managing All Its Functions Essay892 Words   |  4 Pagesfocus on building a loyal customer database. They shifted their focus from network. Airtel comprehended that its network operations could be better accomplished by Ericson, Nokia or Siemens and IBM. The reason to outsource is to focus on core, have a scalable network, faster reach, better quality, providing enhanced services and to have a team of best persons to manage networks across the globe. Airtel’s strategy of outsourcing with Nokia Siemens and Ericson included buildup, maintenance and overhaulingRead MoreResearch And Development ( R D ) And Acquisitions1608 Words   |  7 Pagescompanies should look at their organization at a functional level, and identify the processes and tasks in order to identify opportunities that can be gained from outsourcing versus developing in-house. Additionally, companies should focus not on where the innovation occurs, but rather who will ultimately have control of the final product that comes from that innovation. A look at some of the top U.S. companies that spend money on RD (Microsoft, Pfizer, Ford, GM, IBM, Johnson Johnson, Intel, and Merck)