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Outsourcing and Offshoring

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Outsourcing and Offshoring
Name
Institution Abstract
Venus Widgets plans to adopt the operation approach of outsourcing and offshoring to increase its operations within the international sphere. Due to the growing pressure to improve efficiency and reduce costs, outsourcing and offshoring practices are specifically focused on helping the company obtain particular products and services either from a third-party company or foreign countries in the global market. Both outsourcing and offshoring will enable Venus Widgets to save money and streamline its functions globally. The company will obtain goods and services at lower prices from other countries while at the same time maintaining the desired quality level by paying for what is precisely needed. In outsourcing and offshoring, companies do not incur high operation costs since the ventures and third-party units from which they obtain their goods and services from the global markets are run and operated independently. As a result, the company is provided with the optimum opportunity of saving money.
Key Words: Venus Widgets, Outsourcing, Offshoring, Global Markets, Save Money, Goods and Services
Outsourcing and Offshoring
Outsourcing
The strategy that can be implemented to help Venus Widgets streamline the company’s functions globally in regards to outsourcing is “Shared Service Capabilities (SSC).” The SSC promotes the separation of the operations in the subsidiary organizations (third-party units) from the parent company.

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Therefore, the business units owned by the third party capture the different dimensions of the market as a separate legal entity and an independent unit. The operation of the third-party business units as separate and independent legal entities is a reflection of a revenue-oriented and customer-centric approach that enhances the competitive capabilities of the company (Janssen & Joha, 2016). The enhanced competitive capabilities of Venus Widgets, for instance, is of the implication that the company achieves great flexibilities in operations that consequently help to streamline its functions.
Offshoring
The strategy that can be implemented to help the company streamline its functions in relation to the offshoring plan is the “Shared Service Operations (SSO).” The SSO enables Venus Widgets to improve its operation level in the global market by running separate customer-centric business entities in the foreign countries. The SSO strategy is implemented to increase the ability of the company to serve both the internal customers in the domestic market where the parent company is located as well as the external clients in the international markets. Therefore, the company acquires the opportunity to confront the increasing competition from the overseas firms which subsequently helps in the streamlining of functions (Stratman, 2015).
It is conclusively imperative to note that both outsourcing and offshoring help the company, Venus Widgets, to save money by offering labor cost advantages. As posited by Aksin & Masini (2017), the obtaining of goods and services from the different locations and third-party organization worldwide at cheaper prices is a practice of reducing the human resource operation costs. The cost of running and maintaining the human resource facilities in different regions or countries globally are extremely high, accounting for approximately 50-60% of the company’s operating budget including the employees’ salaries. However, in outsourcing and offshoring, the company do not incur such high operation costs since the business and third-party units from which they obtain their goods and services from the global markets are run and operated independently (Aksin & Masini, 2017). As a result, the company is provided with the optimum opportunity of saving money.
References
Aksin, O. Z., & Masini, A. (2017). International Competitiveness: Effective strategies for internal outsourcing and offshoring of business services – An empirical investigation. Journal of Operations Management, 26(2), 239-256.
Janssen, M., & Joha, A. (2016). Emerging shared service capabilities and the customer-oriented enterprise: Critical management issues. Strategic Outsourcing: An International Journal, 1(1), 35-49.
Stratman, J. K. (2015). Facilitating offshoring with enterprise technologies: Reducing operational friction in the governance and production of services, New Edition. Journal of Operations Management, 26(2), 275-287.

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