Outsourcing
Lower labor costs. Companies typically outsource to business in developing countries where the cost of labor is significant cheaper. Lower labor costs will improve the company's bottom line.
Less regulation developing countries often have low level of regulatory restrictions, which can also reduce the cost of operations and increase productivity.
For example, there may not be limits on overtime or on work health and safety issues.
Focus on core competencies.Companies that outsource lower -level work, or work the business is not optimized to perform, can focus on the work activities at which they excel.this will increase productivity, efficiency and effectiveness. For example tech company in silicon valley may be better off outsourcing its manufacturing operations to a company's in China so it can focus on research and development.
Reduced overhead. Outsourcing can also reduce a company's overhead costs
Because the outsourcing company uses its own facilities equipment and personnel to
Perform the work. In fact, its theoretically possible to engage in massive manufacturing ventures out of a room in your house if you outsource all the
Manufacturing to factory overseas.
Flexibility. Outsourcing means that you can stay lean and mean which makes it easier to adapt to change. For example, you don't have to invest a bunch of money and resource into new plants and equipment that may become obsolete quickly instead,
You can pass that risk off to the outsourcing firms.
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