Outsorcing

Abstract
The intention of this document is to explain the concept of outsourcing the opportunities and risks outsourcing might represent to a corporation in order to be able to determine ifoutsourcing is for every company or for just a few.









Outsourcing

Introduction
Today’s executives are facing continuous changes in all environments involving their businesses. Thesechanges include the growing necessity of expanding in their current markets as well as venture into other markets, all in order to continue to be competitive; this expansion in many cases involvesbecoming a multinational corporation. In this context, one of the major challenges corporations have is to maintain costs to a minimum without the sacrifice of quality in both their product and/or theirservice. In many cases the solution to this problem is to outsource.
Outsourcing, fundamentals.
Outsourcing in few words can be explained as the transfer of property of a process from one company toanother. As Kotabe explains, “the sourcing of major components and products by multinational companies from independent suppliers on a contractual basis is referred as outsourcing” (1998) in otherwords outsourcing is based in the transfer of an activity, that preferably does not form part of the core abilities of the company, to a third company that specializes on such activities. Outsourcinghas become a trend among global companies driven by the necessity of concentrating their resources in innovation rather than other activities that could be delegated by a company that has moreexperience in such processes or services therefore providing agility, better quality and cost savings. By outsourcing a company is granting the property of the process to a third party and just focusing onthe results obtained; this differs from subcontracting where the parent company dictates how the process must be done and the third party does not have the ability to operate freely in this sense....