Outsourcing

by Lee Wen, Fragrant, and Poh Lee

Outsourcing is subcontracting of work to another firm or buy the components for a product rather than produce them in order to reduce production costs. In other word of outsourcing is offshoring.
There are several benefits when a company outsource. The benefits of outsourcing are improve in specialize skills, save time, reduce the competitiveness and save costs. Other than benefits, there are some of the disadvantages which are loss of skills, loss of control, hidden costs and security and confidentiality threat.
There are mainly exist of four types of outsourcing services that businesses can contract with an outsourcing company which is manufacturing service, professional service, process specific service, and operational service.
In addition, outsourcing also helps the industry to grow to support their multinational clients. The outsourcing companies and the new market entrants have created centers and jobs in other low-cost geographies such as Philippines, Vietnam, Indonesia, Eastern Europe, and Latin America. The local centers will provide additional language and technology capabilities or time zone support which often required by clients to meet the service level agreements (SLAs) that dictate the support an outsourcing company will deliver.
Apple Inc. begins to switch their manufacturing overseas. They targeted Asia because it is less expensive and has semiskilled worker that is enough to make Apple products. The main reasons are because the flexibility, perseverance, and skills of foreign worker have compared to the American counterpart. For example, Apple suddenly redesign the screen at the last minute and the assemble line have to overhaul to give way for the change. To accommodate this change, the plant foreman woke up the workers that are still sleeping from their dormitories and the changing begins. Just within four days, the plant manages to overhaul to the new screen design and the new production start to run. Other than Apple, company that runs huge outsourcing is also NIKE. The productions that NIKE outsource are footwear manufacturing, apparel manufacturing, third-party licenses and distribution centers.