Outsourcing and its Influence on People

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8th Feb 2020 Business Strategy Reference this

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Outsourcing refers to the function of the business organization that involves contracting a third party outside the organization to provide systems, services, and produce products that the company was initially providing using its internal resources including its staff and machinery. Companies use outsourcing as a strategy to decrease production cost and in turn, maximize profit, enhance its focus, share risk with other partners, and increase the usage of external resources, maximize efficiency and to gain access to world-class capabilities.  The concept of outsourcing has been subjected to numerous debates with its supporters claiming that it is creating incentives for companies to distribute resources where they will be functional and hence cut costs while increasing net revenue and it also encourages free-market economies. Those against the idea of outsourcing, on the other hand, claim that it causes loss of jobs in the domestic markets primarily in the manufacturing sector and therefore, adversely affecting the economic growth of the region.  However, outsourcing is an integral action in the business today, and organizations need it to minimize cost and maximize net revenues and also make them able to focus on the company’s core activities. Therefore, to remain competitive and relevant in the industry, the organizations need to embrace the strategy of outsourcing to give them a competitive edge over their rivals in the market.

The business organization engages in the provision of products in which they may not have all the resources necessary to create all these products to final products with premier quality that will be competitive in the market. Therefore, the businesses are forced to seek services of professional specialists who can do a quality job, and this is when the concept of outsourcing comes into play. Outsourcing is vital for businesses as it helps them to produce quality products by using people with the necessary expertise and experience to complete specific tasks on their behalf.  Through the outsourcing strategy, the business does not incur overhead costs, as well as costs associated with technology and equipment.  In addition to these, outsourcing is necessary in the business organization in the contemporary business world because by implementing it, organizations can concentrate on the core business process and hence improving efficiency and productivity.  In the long run, the adoption of the approach of outsourcing gives a company a competitive edge and hence increasing its competitiveness, reduces the overall costs of operation, and also results in faster turnaround time. 

An excellent example of outsourcing is when a personal computer, a manufacturing company like Dell contracts other companies to make specific internal components or buy these components from different manufacturers for its computers to minimize production costs. Another example is when an academic institution like a university uses the cloud computing services provided by an external service provider to store its files and back up its essential documents.  Through this outsourcing, this university will be able to have accessibility to the digital technology that is based on pay as you go without having to use a lot of money to develop its own. 

The opponents of the concept of outsourcing base their claims on the limitations of outsourcing to oppose its adoption in organizations. These people claim that this approach is disadvantageous to the firms implementing it and also the economy because it involves the signing of contracts that may require legal intervention hence time-consuming. They also claim that outsourcing is a threat to the security of the company as the third party has access to the information of the organization that is confidential and this is risky because the third party may suffer data breach causing significant harm to the organization. If there exist miscommunication between the organization and the outsourced service provider, there could be delays in the completion of the task or the quality of the product developed may not meet the standards. Another disadvantage of outsourcing is that it makes the organization to lose its control over procedures and policies. (Mehta et al., 334). Despite these claims, the advantages of outsourcing outweigh the disadvantages, and therefore, it is essential in the business today. The main benefits of outsourcing are cost and time saving and when implemented well the approach of outsourcing effectively reduces the time of completing a task and the expenses associated with operations and therefore giving an organization a competitive advantage in the industry over other competitors (Windrum, Reinstaller, and Bull, 221).

From the analysis of the strategy of outsourcing, I find it as a business approach that is effective in the minimization of the costs and help an organization to maximize its revenues. Because outsourcing involves the hiring of a third party that has professionals with the necessary expertise to provide the outsourced services and goods the products that the company takes to the market are of premier quality a situation that will give it a competitive edge.  Since by adopting the approach of outsourcing the profitability of the organization’s increases meaning it encourages the growth of this business forcing them to hire more employees and also with increased productivity revenues also increases and eventually there is an increase in the tax remitted to the government.  From this, it is clear that outsourcing is beneficial to both the businesses, society as it leads to an improvement in the living standards due to increasing in jobs and to the economy due to its contribution to the increase in GDP.  I, therefore, find the outsourcing strategy to be effective and one that all business entities in the modern world need for them to remain competitive in the industry.

Tourism Industry and its effect on the Countries and People

Tourism involves the movement of people from one region to another for various reasons which can be either recreational purposes or business purposes, and these people are referred to as visitors. Tourism is the process or act of moving from home to a different region to seek pleasure, relaxation, and recreation and at the same time using financial provisions of services. Tourism and travel industry is currently leading in the world surpassing major industries like automobile, food products, and oil exports. Tourism can be either inbound or outbound. Inbound tourism fosters the economic growth of a country as it encourages job creation while outbound tourism encourages the cross-cultural goodwill and understanding. Tourism has a significant impact on the global economy, and for this reason, public organization and businesses have developed a great interest in the sector while focusing on the impact that tourism has on the economy at local, state and national level.  Tourism has a multiplier effect on the economy and its impacts on the economy reach virtually every individual and sector in the region.  The tourism industry affects the economy of a region in three interrelated ways which include induced, direct and indirect effects and these impacts and the way the tourism industry is structured determines how it will affect the country’s economy.

There have been debates surrounding the impact of tourism on the economy with the supporters arguing in favor of tourism where they claim that tourism leads to the creation of jobs, economic growth and improve the living standards of the locals. On the other hand, the opponents argue that tourism has adverse effects on the community, economy, and the environment. The opponents cite various disadvantages of tourism to back their claims. In their arguments, they point out that in some cases, it leads to overcrowding hence leading to an increase in the prices of commodities due to high demand. According to the opponents, tourism increases pollution due to littering of waste materials in the parks, and this harms the quality of life of animals and people in that area. Also, they claim that tourism leads to the erosion of the cultural values of the locals (Abdullah, Patterson and Pegg, 49). Although there are mixed opinions about the impact of tourism on the economy there, exist a quantifiable data that reveals tourism has a positive impact on the employment and economic growth and this implies that it improves people’s living standards. 

The industry of tourism is beneficial to the people and the country in various ways, which include an induced, direct, and indirect positive effect on the economy. The induced impact of tourism on the economy involves the money that the people employed directly or indirectly by the tourism sector inject into the economy through their spending. The direct effect of tourism on the economy involves the GDP generated by the industry directly from the activities it engages in, such as tour operators, airlines, travel agents, and hotels.  On the other hand, indirect effects of tourism on the economy of the country involves spending by the government on tourism matters like administration, visitor services, and tourism promotion, and also a capital investment in the tourism industry. Tourism plays a vital role in job creation, and this makes the income of people in the country to increase hence improving their living standard. Also, through the income taxes, they pay the country’s GDP also goes up. Another advantage of tourism is that it encourages peace and security through cross-cultural understanding. Tourism promotes sharing and cultivation of local traditions, food, and customs between the tourists and the locals a situation that leads to the creation of civic pride. The interaction between the locals and the guests leads to a better understanding of their cultural differences.  Mega-events like world cup and Olympic or royal wedding encourage a large number of guests from foreign countries and other parts of the country to come to the region where it is happening. The spending of these tourists injects a lot of money into the local economy leading to the economic growth of these regions. The international sports event, like the world cup in South America, leads to long term improvements in infrastructures such as roads and stadiums (Tosun, 618).

Although tourism has positive impacts on the economy, culture, employment, income, and living standards of people in a country as well as the economic development of the nation, it also has its limitations. Tourism may lead to erosion of the cultural values and the morals of the local people due to emulating how the guests dress, the kind of foods they eat, and their lifestyle.  Also, tourism may lead to increased pollution hence affecting the quality of life in an area. Also, it may cause congestion like in Mount Everest slopes, where the number of tourists is higher than that of the locals, and this makes it difficult to protect the natural resources in these areas. In other regions where there are insufficient infrastructures when there is an influx of tourists due to special events in the area like Olympics or “busy season,” it causes stress on these insufficient facilities like roads leading to traffic jams and congestion on the streets, and this affects the locals. 

From the analysis of what tourism is and its impact on the country’s economy and the living standards of its people, I find tourism industry to be essential for any country. Tourism leads to the creation of jobs, economic growth, and understanding of the different historical, geographical, and cultural facts of various countries. By considering the contribution of tourism industry on the global economy, tourism should be embraced and supported by all countries from all levels both at the local and national level because if well managed it has so many benefits to the country and its people.

Work Cited

  • Abdullah, N. H., Patterson, I., and Pegg, S. “Organizers’ and residents’ views about the benefits and costs: The case of Monsoon Cup International Sailing Regatta, Malaysia.” International Journal of Sport Management, vol.17, 2015, pp. 46–66.
  • Mehta, A., Armenakis, A., Mehta, N and Irani, F. “Challenges and Opportunities of Business Process Outsourcing in India.” Journal of Labor Research, vol. 27, issue 3, 2006, pp. 324-338.
  • Tosun, C. “Limits to community participation in the tourism development process in developing countries.” Tourism Management, no. 21, 2000, pp.  613–633.
  • Windrum, P., Reinstaller, A and Bull, C. “The Outsourcing productivity paradox: Total outsourcing, organizational innovation, and long-run productivity growth.” Journal of Evolutionary Economics, vol. 19, issue 2, 2009, pp. 197-229.

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