As a manager of an organization, you will often need to find ways to cut costs.

Question

As a manager of an organization, you will often need to find ways to cut costs. One way to cut costs is to outsource by hiring another organization to perform the service. Consider the scenario below.

As a manager for the public outreach department, you realize that the current system for managing outreach issues is outdated. You would like to have a new outreach system developed using the Cloudera platform to help manage big data. However, no one in the organization has the expertise. You will have to outsource the project to save on costs and avoid management problems. Two companies have sent in a bid—one from Vancouver, Canada, and one from Mumbai, India. The bid from India was slightly lower than the bid from Canada. Compose a response that includes the elements listed below.

Define what is meant by outsourcing.

Explain how Peter Drucker’s statement about how one company’s back room is another company’s front room pertains to outsourcing. Use an example.

Summarize the management advantages, cost reduction, and risk reduction of outsourcing.

Summarize the outsourcing risks concerning control, long-term costs, and exit strategy.

Discuss which company you would outsource to and why.

Does distance matter?

Explanation / Answer

Outsourcing can be defined as the process of obtaining products or services from an outside supplier externally because internally the organization may not have required knowledge or resources in developing or maintaining such an aspect. I believe that the statements states that the guard services needs to be done by the organization who are specialized in this aspect, instead of doing it by itself. For example if an organization plans to outsource one of their units, they need to be very much serious about looking at the aspects and details based on which they would decide on the organization to outsource. There are various factors associated with the same, like cost, control, etc. While making a decision regarding the same the orgnaization needs to consider these aspects on a whole and ensure the profitability of the organization.

In this case I would go for the company from Mumbai, India because the cost is less and as the service that is being outsourced will not deoend on the amount of distance that the organization possess between them, hence the cost can be looked onto here.

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