Before you outsource, you should prepare your self for the consequences that possibly happen to your business,and of course finding the right business partner is the key to success. Also before entering your business in outsourcing industry you should be knowledgeable about about the organization.

Hi AutoCAD Designer,
Generally I understand, but how should we prepare ourselves? What do you mean by the ‘organization’. Do you mean we have to know ourselves (the company you work for)first to find the right business partner? What kind of self check-up can we do?

Before any decision of what oursource, first we must to know what is the value chain of the business.
We must identify the key process using Top Down Annalysis.
In each process we find many subprocess and we can evaluate what represents value added to the process.
Each process that not represent value added is candidate to outsourcing.
Not all process must be outsourced, only those not represent value added and the cost-benefits of manage in ousourcing is verified.

it is rightly said that it is not for all companies .it is highly company specific .

Cost incurred for Outsourcing may not be cheaper across all outsourcing models. However, Outsource can allow setting a more demanding quality level to the outsource partner, which a company may not wish to spend too much time to focus.

I will talk about the human part resulted from the outsourcing, there maybe a lack of team-work specially if contractor keeps changing their employees, there will be a gap in the pay between your staff and contractor and this will have negative impact sometimes, loyalty, security, integrity and the having services that is remote or does not coop with your organization culture/strategy.

Outsourcing is often given a bad press, especially where it initially results in job loses. However, protectionism only really slows the innevitable and makes companies less competitive.

One great outsourcing example - James Dyson was criticised when he outsourced the production of his vacuum cleaner overseas with the loss of jobs in the UK. However, it proved so successful that the company grew very rapidly and he now employs more service people in the same area of the UK than before. Sometimes the longterm picture has to be taken.

I think, any business should use both outsourcing and insourcing according to the needs and goals of staffing. However, small business are not advised to go to outsourcing as it adds more financial burden (extra salaries)and may conflicts with organizational culture. At the same time, we need to get the best from people using appropriate motivations.

Our small sixteen person admin office has outsourced two processes in the past year with good results-payroll and IT. Altho the IT costs were initially higher, once we became familiar with the process, it has allowed us to direct staff to more important work within the association and leave IT to a company that specializes in IT and nothing else. We have seen no negatives after nearly a year of outsourcing and are considering other ways we might utilize outsourcing, for example our web development processes.

Hi David
I just read that the rising fuel costs are great potential benefit for the USA manufacturing industry.
With the cost of fuel, it is almost at the point where the cost of shipping steel from Brazil to China/Malayasia and finished goods from China to the USA is more then $40.00 per metric ton.
That is just at the break-even point, where at $42.00 per metric ton, it is less expensive to manufacture in the USA and avoid the long leadtimes. And jobs will be created in the USA too.

Oil and environmental issues. We still need to evaluate the value chain of the business as Martingl said. How about programming? There is no shipping cost. Coding and testing could be good subprocess for outsourcing. I also thought the case of vacuum cleaners in the UK mentioned by Will highlights the upside of Outsourcing.

Outsourcing is a controversial issue given this is an election year in the US; quite ironically the key battleground states will be those whose economy has been adversely affected by outsourcing. I’ve myself been a victim of jobcuts in the IT industry as a result of outsoucing on two occasions. My perspective is that Free Trade only works when business has free and unfettered access to international markets. China must provide wider access to its markets and it must peg its currency to international currency rates. Furthermore, rather than ask for people to pay in North America carbon taxes. Many of the world’s largest sources of environmental polution are in Asia and the US.
It is my fear that outsourcing is leading to erosion of the middle class in North America, as it is in serious trouble beginning with high fuel costs, the problems in the sub-prime mortgage market, rising health care costs, and the decline in public education. This comes at a time when in record numbers babyboomers are retiring. Unfortunately for us in North America we have a cold climate and we need housing and heat and shelter, and since many of us live in urban areas we cannot grow crops. Therefore we need to call upon politicians to enforce and hold nations like China accountable and hold corporate giants accountable to the markets they serve.

Sometimes it’s difficult to separate political considerations from business considerations.
In fact, outsourcing is not a new concept, whatever it is called and wherever it is done; onshoring, nearshoring, offshoring… New products, emerging technology, and competitive substitutes can also replace others in the marketplace. Can you imagine life without plastics now? I believe it is a part of economics and business dynamics. Cost alone is not the determinant factor in subcontracting a business sub-process. Surely language, culture, and business customs—as well as the skills of the outsourcing vendors—should be assessed. In general India is stronger in dealing with English-speaking countries, while Japan’s major software development outsourcing partner is China. Israel, on the other hand, gets more from the US and Europe.

Can anybody tell me what should be manufactured in USA? What is America manufacturing? IT related products? What kind of hardware if not software? Printers? computers?