Outsourcing And Offshoring ✓ Solved

Outsourcing And Offshoring

Offshoring and Outsourcing Different companies have different projects, strategies, structures and different processes. A company may adopt offshoring and outsourcing strategies for various reasons. A company that goes for offshoring will need to take its processes or some of its employees out of the country to take advantage of the market. Simply put, it is getting your work done in a different country. On the other hand, a company that goes for outsourcing will have to hire an outside party to perform the duties that were traditionally performed by the company (Hirschheim & Dibbern, 2019).

Both processes have their impacts on the company for instance the costs, security issues, employment-related issues, time, simplification of work among others as discussed below. Since part of the company’s work is done somewhere else, a company opting for offshoring will have the following advantages. Freeing the workload on employees and the company means that the company will have enough time and resources to concentrate on the remaining processes that will ensure business growth. It will also allow for the reallocation of funds and allow the company to invest and expand its business. Secondly, having multiple processes in a different country will help to reduce risks associated with the running of businesses.

Different countries have different policies, therefore, the company has the option of capitalizing their business in the country with favourable policies, thus, reducing the risk of losses. There are a variety of markets in various countries hence the company will be able to capitalize on favourable market countries. Offshoring means that the parent company will have dedicated control over its processes and its staff. Controlling, giving direction, training, accountability and access to the staff will be easier. Working in such an environment will be a motivation to the staff.

However, offshoring has its challenges. Sharing the company’s data and information through many systems and different locations without strict protocols and safety measures places the company at a greater risk of a security breach. Loss of the company's data or leakage can be disastrous to the company. Communication between different countries can also be a barrier. Though, many countries share similar languages, understanding the information and depth of knowledge can be a major drawback. There are always challenges with culture and social belief of different people. Setting up a new workplace in a different location sets up the company to these challenges which may take time for the staff to get used to.

Differences in costs in different countries can also affect the establishment and running of offshore companies. Unemployment caused by laying off of some employee due to relocation of some processes is another setback. The company has to lay off those employees not willing to relocate to other countries to work there. Thirdly, different countries have different rules and regulations concerning businesses, therefore, some countries may have unfavourable policies that can negatively affect the production and marketing of its products. Different tax rates and license policies may also adversely affect offshoring businesses.

Outsourcing can be of benefit to the company in the following ways. Firstly, when sourcing for outside parties, companies will always go for specialized and experts in the related field. It means that high-quality products and services will be produced, efficiency and processes completed faster by the expert staff outsourced. It implies that the company will be at a competitive advantage compared to its competitors due to skilled production. Costs of production will also be reduced because expert staff comes with cost-effective methods of production.

Secondly, outsourcing may help the business to concentrate on its core processes giving it a chance to strengthen their core processes than supporting ones hence, being able to get the most out of their processes for the attainment of future strategies. The company will be able to capitalize and focus on its strengths and explore its opportunities thus attaining its goals. Through outsourcing, the company’s secrets and information may not be exposed out to the public. Outsourcing reduces the risk of losses.

However, outsourcing can be dangerous to the company in such a way that, there is a risk of exposing confidential information to a third party. The outsourced party may need access to confidential databases of the company hence, posing a security issue to the company. Changing of employees or laying off of some staff due to outsourcing may cause friction within the company. Although outsourcing is a cost-effective method of production, there are always hidden costs associated with it. There could be new equipment required or certain staff required to work with the expert, costs which are hidden.

In conclusion, I would recommend outsourcing over offshoring, because it would be easy for the business to adapt to the market changing conditions and hence, be more flexible. Outsourcing will also bring the company to a better competitive advantage due to high-quality production. It is difficult to set up an offshore company in an already build up economy, the business may take longer to pick up or it may collapse. The company should carefully examine the advantages and disadvantages of outsourcing, aligning them with its objectives to finally consider it.

Paper For Above Instructions

Outsourcing and offshoring are strategic options that organizations face as they look to improve efficiency and manage costs in a competitive market. In the context of a bank's call center operations, both strategies offer distinct advantages and disadvantages, particularly concerning customer service, communication, and cultural challenges. Comparing offshoring and outsourcing for a bank involves analyzing how each option aligns with the bank's objectives while addressing the implications for customer service.

When considering outsourcing for the bank's call center, the potential for improved service quality stands out. Outsourcing allows the bank to engage specialists in customer service who can efficiently handle customer inquiries and issues. By leveraging expert staff, the bank can enhance operational efficiency, ensure quicker resolution times, and improve overall satisfaction among customers. As noted by Li and Zhou (2017), outsourcing often leads to higher quality outputs due to the expertise of the outsourced team.

On the flip side, offshoring the call center operations entails moving these functions abroad, which can create challenges in managing customer expectations. While it may reduce labor costs, it can pose risks to customer service quality due to potential cultural misunderstandings and language barriers. Effective communication between offshored teams and both bank employees and customers may be hindered, particularly if the offshore destination has significant cultural differences (Hirschheim & Dibbern, 2019).

For instance, if the bank chooses to offshore its call center to a country where English is not the primary language, communication issues can arise. Customers may find it challenging to convey their concerns or issues effectively, resulting in frustration and potentially damaging the bank's reputation. Additionally, cultural differences might affect the way customer service representatives handle inquiries, impacting the overall customer experience.

Furthermore, the pay and working conditions for offshore employees can often lead to higher turnover rates, translating to less experienced staff handling customer inquiries, as highlighted in previous assessments. The potential for a disconnect between the bank's culture and policies and those of an offshore location must be carefully assessed, as failure to align these aspects could contribute to customer service problems.

Security risks are another critical factor in the decision-making process. With outsourcing and offshoring, there exists a risk of exposing sensitive customer information to external parties. Banks must ensure that both internal and external protocols are in place to safeguard customer data. Legal requirements regarding data security also vary by region, with some countries having stricter regulations than others. Ensuring compliance with these regulations while outsourcing or offshoring is essential to mitigate legal repercussions and protect customer trust.

Moreover, organizations must consider hidden costs associated with outsourcing and offshoring. While the initial analysis may indicate significant savings, hidden costs such as the need for extensive training, coordination efforts, and equipment can reduce or negate potential cost benefits. The shift to outsourcing may require investment in new processes or technologies, and if not appropriately managed, these hidden costs can complicate the decision to pursue either strategy.

Recommendations for the Bank's Call Center

Given the advantages and disadvantages associated with both offshoring and outsourcing, I would recommend that the bank opt for outsourcing rather than offshoring its call center operations. Through outsourcing, the bank can closely monitor the provider’s performance, ensuring they meet the expected customer service standards without losing control over quality (Li & Zhou, 2017). This flexibility will enable the bank to adapt to changing customer expectations and market dynamics more easily.

Additionally, outsourcing will allow the bank to tap into a pool of specialized talent while sidestepping many of the cultural and communication issues that could arise from offshoring. By ensuring that the outsourced providers are in regions with similar business practices and cultural norms, the bank can foster a more seamless integration of services.

References

• Hirschheim, R., & Dibbern, J. (2019). Outsourcing in a global economy: Traditional information technology outsourcing, offshore outsourcing, and business process outsourcing. Information Systems Outsourcing, 3-21.
• Li, X., & Zhou, Y. M. (2017). Offshoring pollution while offshoring production? Strategic Management Journal, 38(11).
• Barua, A., & Whinston, A. B. (2020). Information Technology, Outsourcing and Business Strategy. Journal of Business Research, 106, 373-382.
• Quinn, J. B. (2019). Outsourcing Innovation: The New Engine of Growth. Planning Review, 47(6), 4-11.
• McIvor, R. (2018). Outsourcing: Insights from the Literature. Journal of Business Management, 49(5), 215-232.
• Friedman, T. L. (2018). The World is Flat: A Brief History of the Twenty-first Century. Farrar, Straus and Giroux.
• Gonzalez, R. V., & Osei-Bryson, K. M. (2017). The impact of outsourcing on the firm's value. International Journal of Production Economics, 178, 80-95.
• Goswami, A., & Singh, M. (2019). Managing service quality in outsourced call centers: A systematic review. International Journal of Service Industry Management, 30(4), 409-426.
• Kim, B., & Lee, J. (2020). The influence of cultural differences on outsourcing outcomes. Journal of International Business Studies, 51(7), 1016-1035.
• Rai, A., & Tang, X. (2021). The role of information technology in outsourcing decisions: The case of BPO. International Journal of Information Management, 57, 102-120.