OUTSOURCING

DEFINITION Outsourcing is the the business practice of hiring a party outside a company to perform services and create goods that traditionally were performed in-house by the company's own employees and staff. Usually done as a cost-cutting measure, it can affect jobs ranging from customer support to manufacturing to the back office.

Let’s start with the first set of slides 1 Pros and Cons Let’s start with the first set of slides

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Pros Businesses can reduce labor costs significantly by outsourcing certain tasks They can also avoid expenses associated with overhead, equipment and technology In addition to cost savings, companies can employ an outsourcing strategy to better focus on core aspects of the business. Outsourcing non-core activities can improve efficiency and productivity because another entity performs these smaller tasks better than the firm itself Price dispersion in another country may entice a business to relocate some or all of its operations to the cheaper country in order to increase profitability and stay competitive within an industry.

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CONS Signing contracts with other companies may take time and extra effort from a firm's legal team. Security threats occur if another party has access to a company's confidential information and then that party suffers a data breach. A lack of communication between the company and the outsourced provider may occur, which could delay the completion of projects.

Examples Lloyds Banking Group to outsource 1,000 jobs Lloyds Banking Group has told staff in Edinburgh and Bristol that it will be outsourcing 1,000 jobs. A Scottish Widows spokeswoman said: "Lloyds Banking Group has partnered with Diligenta to enhance its service proposition for customers with heritage life, pensions and investment products through a new digital platform. "Diligenta already successfully manages more than 11 million life and pension policies in the UK on its end-to-end policy administration platform. The new platform will make managing heritage products simpler and more efficient for LBG customers."

A picture is worth a thousand words Globalization continues to increase in part as a direct result of increased outsourcing – though, of course, the cost benefits and competitive edge begins to shrink as economies and prices in different countries begin to converge.

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Citations Yellow Blue Red Yellow Blue Red http://www.investopedia.com/terms/b/business-process-outsourcing.asp Blue http://www.bbc.com/news/uk-scotland-edinburgh-east-fife-41402414 Red Is the color of blood, and because of this it has historically been associated with sacrifice, danger and courage. Yellow Is the color of gold, butter and ripe lemons. In the spectrum of visible light, yellow is found between green and orange. Blue Is the colour of the clear sky and the deep sea. It is located between violet and green on the optical spectrum. Red Is the color of blood, and because of this it has historically been associated with sacrifice, danger and courage.