The paper "Various Dimensions of Outsourcing Decisions" is a perfect example of business coursework. Outsourcing is the contracting by one firm of some of their operations or services to another firm. In most instances, large firms usually outsource their production services to firms in overseeing in an effort to take advantage of the available cheap labour according to King & Torkzadeh (2008). Another reason why firms outsource is an effort to save money. The firms that outsource contract other organizations or engage specialists firms to offer services other than trying to provide the services on their own.
The intention of this discussion is to highlight what various writers identify as the key dimensions when discussing the outsourcing decisions. The essay will also discuss how the relationship strategy approaches to contracting to enable organizations chose to outsource. The essay will also describe and compare two Australian organizations have outsourced their services. Several writers have identified and discussed various dimensions of outsourcing decisions. Such researchers and writers include John Wacker, a visiting scholar and researcher at Arizona State University, C. L. Yang, an assistant professor at Chung-Hua University, Ronan McIvor, a professor at Ulster University, and Chwen Sheu, the Paul Edgerley Chair in Business Management at Kansas State University as argued by McIvor (2011).
This is after collection and analyzing data from 970 manufacturing companies in 17countries. In order for any process of outsourcing to be effective, they are a number of key dimensions that need to be analyzed according to the above researchers/writers. Such include process contribution to competitive advantage, relative capability in the process, and potential for opportunism from process outsourcing.
Analyzes of every dimension give firm several sourcing strategies. It is, therefore, crucial to take into consideration these dimensions when discussing outsourcing decisions as illustrated by Geis (2010). The determination of how the process contributes to competitive advantage is one of the key dimensions to the outsourcing decision. The critical processes to competitive advantage and the ones that organizations possess a strong capability to should remain internal. In an effort to remain in a strategic position, such processes should be given significant levels of strategic attention. Critical processes to competitive advantage have a great effect on the ability to attain a competitive advantage.
This is through either the ability to create a higher differentiation level or attaining a lower cost position that competitors. However, non-critical processes to competitive advantage have less impact on the organization's position. Potential for opportunism from vendors is another dimension that should be taken into consideration according to writers. They are several indicators that assist in identifying opportunism. Such include investment presence in human or physical assets dedicated to a specific relationship will create switching costs for a firm as argued by McIvor (2011).
The presence of fewer capable suppliers, difficulties in measuring the performance of suppliers, uncertainty, and complex interdependencies are some of the other indicators. However, they are several strategies of dealing with opportunism in outsourcing including retaining the process internally, adopting suitable relationship strategies, and reduction of process complexity through redesigning into several processes that are non-specific possible to be provided by more than one supplier.
Gary, N 2001, Extending Australia’s Global Reach by Outsourcing’, Journal of Outsourcing, Vol. 8, no. 5, pp. 17-59.
Gary, N 2008, ‘Outsourcer puts Spice in Australian Food Company’s Hosted Payroll’, Journal of Outsourcing, Vol. 9, no. 6, pp. 45-67.
Geis, G 2010, ‘An empirical examination of Business outsourcing transactions’, Virgnia Law Review, vol. 96, no. 2, p. 241-300.
King, W & Torkzadeh, G 2008, ‘Information Systems offshoring: research status and issues’, MIS Quarterly, Vol. 32, no. 2, pp. 205-225.
McIvor, R 2011, ‘Outsourcing done right’, Industrial Engineer, vol. 43, no. 1, pp. 30-35.
Windrum, P., Reinstaller, A & Bull, C 2009, ‘The outsourcing productivity paradox: total outsourcing, organizational innovation, and long run productivity growth’, Journal of Evolutionary Economics, Vol. 19, no. 2, pp. 197-229.