what is the case against global outsourcing? course hero

Why is outsourcing bad for HR?

HR professionals are mysteriously bad at marketing themselves and their function. Unfortunately outsourcing experiences have ruined more reputations than they have built. Extensive outsourcing sends a message to your senior management that you can't handle the tasks assigned to you as well as someone outside the organization can. It may also create suspicions that your team is behind the times and that you need outsiders to develop new and innovative solutions. In HR, we often talk about being strategic, and if the opportunity to be strategic is going to remain on the table, we must demonstrate that not only can we develop strategy, we can execute it internally as well.

Does outsourcing cut costs?

If you think outsourcing will cut costs you are likely mistaken. The whole idea that outsourcing is cheaper runs counter to logic. Remember, just like your business, outsource vendors must earn a profit. It is highly unlikely that using an outsource vendor will cut your costs significantly (unless some significant economies of scale are present). In addition to contributing some profit for the vendor, you have to add in the additional time it will take to manage an external relationship when conducting any form of cost/benefit analysis relating to outsourcing. For example, remember several years ago when all of the ERP and call center vendors promised "significant savings" if you adopted their product. Did those savings ever materialize? Things haven't changed, almost all vendors still promise significant savings while providing no hard evidence demonstrating that those savings have actually occurred at other companies or can appear at yours.

What does it mean when you insource?

When you insource, you tell your employees that you value their ideas and their work.

Why do consultants rely on data?

Consultants rely on data and reports as their means for exciting employees, and employees who are forced to implement that change often disengage.

What is Fraser's third way sourcing?

In this background, Fraser’s “Third-way” sourcing sought to integrate the benefits insourcing and outsourcing, as followed earlier. It was typically a mid-way between the two. It called for longer-term partnerships with knowledge and technology sharing.

Why didn't suppliers have enough incentive to invest in improving processes?

The suppliers didn’t have enough incentive to invest in improving processes due to small margins and short-term contracts.

How many coalitions does Jeanswear have?

The company divided its business through five different coalitions ranging from Jeanswear to Contemporary brands giving them autonomy of their product line, sales, and marketing. The coalition was responsible for the designs, volume decisions, pricing, and margin goals for their respective product lines, whereas the supply chain organization planned capacity (internally and externally), managed inventory, coordinated all processes required to go from fabric to a finished product on the store shelf.

What happened to the garment industry in 2008?

The aftermath of the 2008 crisis resulted in multiple suppliers shutting down, leading to sourcing problems. In this industry scenario, lower lead times, reduced inventory level, superior product quality at lower costs started gaining significance, while the much sought after the concept of cheap labor was losing ground amongst the garment industry across the world.

What is supply chain strategy in apparel?

For the past few decades, the supply chain strategy in apparel was primarily focused on chasing low-cost labor from one country to the next. Suppliers are evaluated based on the cost of production, transportation, technical expertise, etc. After the finalization of suppliers, samples are shown to retailers and wholesalers, and contracts are signed.

Why were the contracts short term?

The contracts were short-term, which led to a lack of coordination and trust among suppliers. It prevented suppliers from sharing their capacity, cost, work-in-process inventories, etc. causing inefficiencies for VF Brands.

How much of the heritage brand sales were made in the 2000s?

In the 2000s, heritage brands accounted for 90% of the total sales. Traditionally, the company adopted a vertically integrated manufacturing strategy with most of the factories in the US itself.

What are the perceived disadvantages of global outsourcing?

It’s important to note, to avoid any mishaps or miscommunications, organizations need to do their due diligence and research potential outsourcing providers and locations.

What are the top reasons for global outsourcing?

The global business process outsourcing (BPO) industry was valued at $245.91 billion in 2021 and is expected to grow to $435.89 billion by 2028, with a compound annual growth rate (CAGR) of 8.5%.