Outsourcing Thesis Statement

Outsourcing Thesis Statement-19
In order to alleviate the pressure, firms have to either increase R&D budgets or find ways to utilize the resources in a more productive way.There are situations when a firm may consider outsourcing some of its R&D work to a contract research organizations or universities.

In order to alleviate the pressure, firms have to either increase R&D budgets or find ways to utilize the resources in a more productive way.There are situations when a firm may consider outsourcing some of its R&D work to a contract research organizations or universities.

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Criticisms of outsourcing Quality Risks Quality Risk is the propensity for a product or service to be defective, due to operations-related issues.

Quality risk in outsourcing is driven by a list of factors.

This will involve reducing the scope, defining quality levels, re-pricing, re-negotiation, cost re-structuring.

Access to lower cost economies through off shoring called “labour arbitrage” generated by the wage gap between industrialised and developing nations. Resources (for example investment, people, and infrastructure) are focused on developing the core business.

Thus a factory can do manufacturing for several companies and keep a large manufacturing plant operating at nearly full capacity when no individual contract could justify the expense of maintaining the infrastructure.

An example of this would be Fabless semiconductor companies which do design etc but do not have their own, extremely expensive, fabrication facilities.

Other examples would be companies that specialize in the tasks of procuring parts, assembly, QA, etc.

and market these skills as their primary business to companies that outsource manufacturing to them.

Reasons why a firm could consider outsourcing are: • new product design does not work • project time and cost overruns • loss of key staff • competitive response • problems of quality/yield.

The key drivers for R&D outsourcing are emerging mass markets and availability of expertise in the field.


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