One of the key questions managers may ask themselves is whether to Essay

One of the key questions managers may ask themselves is whether to make or buy their products and services. explain the relative - Essay Example As a result of this, the phenomenon of outsourcing emerged under which organizations decided to outsource some or all of their production and service functions in order to concentrate and focus on their core competencies. Most of companies either completely or partially outsourced their production and service function to other countries such as China and India in order to take advantage of cheap raw material and labor force. (Woodall et al, 2009) Opposite decision of outsourcing is the decision of insourcing wherein organizations attempt to produce themselves or provide the services through their own resources. Thus the decision to either outsource or insource depends upon different factors which combine together to allow organizations to decide as to which course of action to take. (Willcocks, 2010) This paper will provide the relative advantage of outsourcing as a viable alternative to the question of whether a firm should produce or make. Outsourcing Outsourcing is one of unique k ind of phenomenon and emerged as a result of the different needs of the international organizations. ... Under outsourcing, two organizations therefore come under the contractual agreement to agree upon the fact that assigned tasks will be performed by the second party to the contract according to the specific requirements of the organizations. Over the period of time, organizations therefore contracted out some or most of their functions to other organizations with better resources and capabilities. Initially the trend was to outsource only non-core operations of the organization however, the requirement to achieve better profitability and become more cost effective forced organizations to also outsource some of their core functions too. It is also important to note that the overall process of outsourcing was regional specific wherein organizations from developed country attempted to outsource their functions to the developing countries. The overall purpose was to achieve the organizational objectives and become more efficient. Insourcing is however, considered as an opposite of the ou tsourcing wherein organization often willing to maintain their control over their core operations. In order to achieve this objective, the resources are however, shifted to the departments which specialize in performing such business functions. By insourcing an organization however, can contract with other contractors to perform the job however, the performance of the function remains within the boundaries of the area where the organization operates. This also means that through insourcing a firm actually attempts to utilize the local resources to complete its operations rather than letting foreign vendors to perform the same. It is also important to note that the process of insourcing