International Business What are the advantages of outsourcing? What are the disadvantages of outsourcing? Discuss why these are advantages and disadvantages and to whom.

Essay by jeannie.trabueUniversity, Master'sA, May 2009

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What are the advantages of outsourcing? The advantages of outsourcing you can save

money, but there are conditions you must met before outsourcing saves money. First,

there is economies standpoint where unit costs must drop as volumes increase. Second,

economies should be accessible across corporate boundaries, and third the savings must

be sufficient to outweigh the additional cost of paying other shareholders a profit.

Outsourcing can help you share risk when you cross the corporate boundaries within the

financial circles. Its best in investing, and deviating out rather than putting all your

money in one stock.

Outsourcing may permit multiple companies to share risk. If your business is done in one

location and an outage or a labor dispute break out then you could be put out of business.

Outsourcing can help accommodate peak loads, and minimize fluctuations in headcount

that could result in from peaks and valleys in demand.

To protect your staff within your

company from fluctuations in demand, every entrepreneur should staff to the valleys and

outsource the peaks.

The added expense per hour of contractors must be balanced against the expense of hiring

enough staff to handle the peaks and then wasting time between peak periods. If peak

loads are frequent and the valleys are short in duration, hiring may be more economic

than outsourcing. If peaks are occasional, contractors will save money in spite of their

higher costs per hour.

Outsourcing can help develop your internal staff, hire cheap labor, well-managed, and

can enhance the development of employees. There are two strategies, one where the

contractors can be used to off-load less interesting commodity and to handle peak loads.

Second, consultants and vendors can be used to perform tasks cheaper bring in new ideas

to train internal staff after working closely together...