Outsourcing
Introduction
Over the past two decades, the term "outsourcing" has become a popular "buzzword" in both business and management. According to the study conducted by International Data Corporation, the US spending on payments of outsourcing will grow to $4 billion by 2010 (Yadav, 2006). This increasing trend presents new prospects and challenges for companies that outsource particular functions and companies that carry on these functions.
Companies use outsourcing primarily to reduce costs and focus on the core competencies. For companies focusing on the core competencies means improving and sustaining what they believe are the most important functions within the company. Thus, non-core functions are contracted out to companies specialized in those functions. Several recent studies provided insights into the outsourcing of different business functions. More companies are choosing to outsource one or more of their marketing functions, and there seems to be a growing trend. A survey of 124 database marketers in early 2005 by Eric Schmitt, principal analyst at Forrester, revealed that almost 40 percent of North American companies outsource their marketing initiatives (Scenario-D)
Purpose
Dateline communications has established a reputation in the industry as an effective business operator. Thus, it is particularly important to always consider new techniques and strategies to sustain and improve the effectiveness of the operation. The company is now looking to take advantage of the benefits that outsourcing can offer. However, the company is concerned about the impacts that outsourcing can have on the company as a whole. As such, the report will focus on the following:
1. Analyze whether outsourcing can be used as a business strategy
2. Determine which functions to outsource
3. Provide the benefits and risks of outsourcing
4. How to prepare for an outsourcing strategy
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