Advantages of outsourcing
Business outsourcing is a new business strategy developed in recent years. That is, an enterprise contracts a part of its internal business to an external specialized agency. Its essence is to reposition the enterprise, reconfigure all kinds of resources, concentrate resources in the field that best reflects the comparative advantage of the enterprise, shape and play its own unique core business that is difficult to be imitated or replaced by other enterprises, build its own competitive advantage, and gain the ability to make the enterprise develop continuously. Enterprise outsourcing has two obvious advantages:
Outsourcing enables enterprises to focus on their core business.
First, outsourcing enables enterprises to focus on their core business. When implementing business outsourcing, enterprises can transfer non-core business, make up for and improve their weaknesses with the help of external resources, so as to focus on the core business of enterprises. According to their own characteristics, specialize in a certain field, a specialized business, thus forming their own core competitiveness.
Outsourcing enables enterprises to improve resource utilization.
Second, outsourcing enables enterprises to improve resource utilization. When outsourcing is implemented, enterprises will concentrate their resources on their core business, and outsourcing professional companies have the technology and knowledge to complete a certain business more effectively and economically than their own enterprises. Business outsourcing maximizes the role of limited resources of enterprises, accelerates the response ability of enterprises to the external environment, enhances the flexibility and agility of organizations, effectively enhances the competitive advantage of enterprises and improves the competitive level of enterprises. Business outsourcing has attracted more and more attention in the market economy competition because it can promote enterprises to concentrate limited resources and capabilities, focus on their own core business, create and maintain long-term competitive advantages, and achieve the purpose of reducing costs and ensuring quality. This is the main form of virtual enterprise management. First of all, we must determine the core competitive advantage of the enterprise, concentrate the intelligence and resources within the enterprise on those activities with core advantages, and then outsource the remaining activities of the enterprise to the best professional company. Each team in the virtual enterprise is located in the "strategic link" of its own value chain, pursuing the realization of core functions and virtualizing non-core functions. For example, Boeing, the world's largest aircraft manufacturing company, only produces cockpits and wing tips; Nike, the largest sports shoes manufacturer in the world, has never produced a pair of shoes, and so on. The virtual cooperation mode of business outsourcing not only makes the production cost of different products tend to be lower and the efficiency is improved, but also can promote enterprises to constantly adapt to the changing market demand and reduce risks, thus creating competitive advantages for enterprises to operate with high flexibility.
Edit the problems existing in this paragraph of outsourcing.
The problems in outsourcing mainly come from the following aspects:
1, which may increase the relocation of corporate responsibility.
Due to the lack of business monitoring in outsourcing operations, the possibility of transferring corporate responsibility abroad is increased, which makes quality monitoring and management more difficult.
2. It may dampen the enthusiasm of employees.
It may dampen the enthusiasm of employees and lead to their loss of professionalism. In business outsourcing, it will inevitably involve the interests of some employees. If they know that it is only a matter of time before their work is outsourced, their work enthusiasm and professional ethics will decrease, they will lose confidence in the company and motivation for their work, which will lead to a significant decline in their work performance.
3. Intellectual property issues
Especially research and development. The ownership of patents and copyrights of technologies developed by outsourcers is usually achieved through agreements between enterprises and outsourcers rather than through laws, which leaves a lot of room for mistakes and traps.
4. The loyalty of outsourcing enterprises
Driven by interests, outsourcing enterprises may jump ship from one enterprise to another, leading to out-of-control enterprises. But at the same time, over-reliance on outsourcing enterprises will lead to higher transaction costs.
5. Selection of outsourcers
Enterprises have many outsourcing options, and the wrong outsourcing will lead to the failure of key technologies, thus losing the leading position in the competition.
Edit the characteristics of outsourcing in this paragraph.
At present, outsourcing has three main characteristics:
First, outsourcing favors back-office business.
In the new economic era, the market is changing rapidly, and the basic principle of enterprise survival is to obtain terminal information in time and change with the market. In order to grasp the terminal market and grasp the pulse of the accurate market, many enterprises do their own work on the front-office business, strengthen services, and outsource the back-office business and the business far from the market.
Second, outsourcing is biased towards mechanical business.
In the information society, the life cycle of products is shortened, the variety is increased, and the batch is reduced. Customers have higher and higher requirements on the delivery cycle, price and quality of products. In this context, meeting individual needs has become the top priority of enterprises. Therefore, enterprises should outsource mechanical and repetitive business through digitalization and software.
Third, outsourcing is often a business in different places.
The important business of an enterprise needs on-site operation and must be completed by the enterprise itself. For those remote or network-based businesses, outsourcing can be implemented. Enterprises can use information technology to exchange and share information with their partners through the Internet.
Edit the main outsourcing mode in this paragraph.
According to different standards, business outsourcing can be divided into different categories, such as overall outsourcing and partial outsourcing, production outsourcing, sales outsourcing, R&D outsourcing, human resources outsourcing, and outsourcing without intermediary and outsourcing using intermediary services. First of all, according to the integrity of business activities, business outsourcing can be divided into whole outsourcing and partial outsourcing. The so-called partial outsourcing means that enterprises outsource all components of their business to excellent service providers in this field according to their needs. If the human resources of an enterprise are partially outsourced, the enterprise will outsource labor relations, employee employment, training and dismissal to different external suppliers as needed. Generally speaking, some outsourcing activities are mainly auxiliary activities unrelated to core business, such as temporary services. When the business volume of an enterprise suddenly increases and the existing processes and resources cannot fully meet the rapid expansion of business, it can not only gain the advantages of economies of scale and improve work efficiency, but also solve the flexible demand of business activities as soon as possible through partial outsourcing and utilization of external resources. In overall outsourcing, enterprises will outsource all business processes such as planning, arrangement, execution and business analysis, and external suppliers will manage the whole business process and make adjustments according to the needs of enterprises. In this outsourcing mode, the enterprise must sign a contract with the contractor, which should include product quality, delivery time, technical changes and requirements for related equipment performance indicators. Overall outsourcing emphasizes long-term cooperation between enterprises, which will greatly inhibit opportunistic behavior, because one-time betrayal and fraud will lead to tit-for-tat retaliation and punishment in long-term cooperation. Outsourcing partners may lose related business, so this partnership will minimize transaction costs caused by opportunism. Secondly, according to business functions, business outsourcing can be divided into production outsourcing, sales outsourcing, supply outsourcing, human resources outsourcing, information technology service outsourcing and R&D outsourcing. Business outsourcing theory emphasizes that enterprises focus on their own core competence. If a business function is not the most efficient in the market or the core competence of an enterprise, it should be outsourced to a specialized manufacturer with higher external efficiency. According to the viewpoint of core competence, enterprises should concentrate limited resources to strengthen their core business, and other non-core functional departments should outsource or outsource. Thirdly, according to the organizational form between partners, business outsourcing can be divided into outsourcing without intermediary and outsourcing with intermediary services. In the outsourcing mode with intermediary, manufacturers and outsourcing suppliers are not in direct contact. Both parties sign a contract with an intermediary service agency, which matches the transaction information, and the intermediary agency makes a profit by charging a commission. This outsourcing mode using intermediary organizations can greatly reduce the search cost of manufacturers and outsourcing suppliers and improve the transaction efficiency. For example, McDonald's has employees in many cities in China. In the outsourcing mode without intermediary, manufacturers and outsourcing suppliers can use the Internet. For example, Cisco Company of the United States outsources 80% of the production and delivery of products through its "Production Online" website, and suppliers authorized by Cisco can access the Cisco database to obtain information on contracted supply.
Main types of business outsourcing
1.R&D outsourcing R&D outsourcing is to use external resources to make up for the lack of its own development ability. 2. Production outsourcing Production outsourcing means that enterprises concentrate their resources on the development, design and sales of new products. Enterprises no longer have their own production plants and equipment, but "outsource" the research related to production and production technology to other contract production enterprises. 3. Logistics outsourcing Logistics outsourcing means that enterprises "outsource" logistics activities to professional logistics companies. 4. Complete business outsourcing except core business means that all non-core businesses are "outsourced", and this enterprise only engages in core businesses with competitive advantages. 5. Global Outsourcing In the world economic competition, enterprises must seek global outsourcing.
Main ways of business outsourcing
There are four main ways of business outsourcing: 1. Temporary services and temporary workers II. Subnet 3. Cooperate with competitors. Complete business outsourcing except core competitiveness
Edit the influencing factors of outsourcing in this paragraph.
Although outsourcing has many advantages, such as reducing production costs, diversifying business risks and obtaining scarce external resources, there are many uncertain factors in the formulation and implementation of outsourcing, which will bring risks to enterprise management. Therefore, it is very important to fully consider and analyze the factors that affect business outsourcing in order to take advantage of outsourcing and avoid outsourcing risks. The negligence of any link may make the enterprise fall into outsourcing risk, which will not only greatly reduce the outsourcing income, but even lead to the loss of enterprise control and core competence. Generally speaking, the factors that affect business outsourcing mainly include the following aspects:
1. Overall strategy of the enterprise
The outsourcing strategy of an enterprise must match its overall strategy, which is the basis for an enterprise to formulate its outsourcing, and outsourcing is a specific strategic move under the overall strategic arrangement. The overall strategy of an enterprise not only determines the self-made/outsourcing decision of the enterprise, but also affects the outsourcing object, outsourcing method and supplier selection. Professor Porter of Harvard Business School believes that enterprises can adopt three basic strategies in market competition, namely, cost leadership and differentiation.
And a centralized strategy. Enterprises pursuing cost leadership strategy always try their best to make themselves the lowest-cost enterprises in the industry. Therefore, economies of scale are needed to reduce costs. However, the differentiation strategy gains extra rewards by providing users with unique products and services. Generally speaking, when outsourcing, cost leaders may pay more attention to the cost-saving advantages of suppliers, while differentiation strategy manufacturers pay more attention to the matching degree of supplier resources and enterprise resources and the difficulty of integration. Obviously, the overall strategy of the enterprise is different, and the outsourcing strategy is also different accordingly. The outsourcing strategy that does not match the overall strategy of the enterprise will not only greatly reduce the outsourcing income, but may make the enterprise fall into outsourcing risk, thus damaging the core competitiveness of the enterprise.
2. Commercial nature
In order to successfully implement business outsourcing, enterprises must choose suitable outsourcing objects, that is, determine which businesses are suitable for outsourcing and which businesses must be self-made. Because different business activities need different resources and have different importance to the competitive advantage of enterprises, enterprises can be divided into core business and non-core business accordingly. Core business (such as research and development of software enterprises, manufacturing of manufacturing enterprises, etc. ) is the business that enterprises invest the most resources and play a key role in the survival of enterprises; It is often a business activity that enterprises are good at, which can create high returns, have development potential and market prospects. Non-core business revolves around core business, which is of relatively low strategic importance to enterprises. For example, financial activities, human resources business and logistics business of manufacturing enterprises are all non-core businesses. Theoretically speaking, the more complex the business nature, the more important it is to the competitive strategy of enterprises, and the greater the possibility of information asymmetry. So enterprises tend to internalize rather than outsource. This view has been proved by empirical research. Masten( 199 1) found that in the aircraft manufacturing industry, the more complex the parts, the greater the possibility of internal production. From the perspective of core competence, core business is the carrier of enterprise's core competence and must be kept in the enterprise. Improper outsourcing of core business may lead to the loss of core competitiveness of enterprises. The influence of non-core business on the competitive advantage of enterprises is relatively weak. Therefore, this kind of business can be outsourced or even purchased directly through the market as needed to reduce risks and improve the utilization efficiency of enterprise resources.
3. Degree of asset specificity
Not only the nature of the business affects the outsourcing decision, but also the nature of the assets needed by the business restricts the choice of outsourcing strategy. According to the transaction cost theory, the higher the asset specificity, the higher the market transaction cost, so the greater the investment risk. The so-called special assets refer to the assets invested to support a specific transaction. Once they are formed, it is difficult to use them for other purposes. Therefore, both sides of the transaction have strong dependence, and one party's default will cause huge trading risks to the other party. Assets with low specificity are widely used, difficult to use and easy to obtain. For this kind of assets, market trading is an ideal choice. For products or businesses with moderate asset specificity, outsourcing can be implemented and external suppliers can be used to achieve economies of scale.
4. Selection of outsourcing suppliers
In business outsourcing, manufacturers and external suppliers actually form a cooperative partnership, and the performance of outsourcing suppliers greatly affects the service level of manufacturers to the market. Therefore, the selection of outsourcing suppliers plays an important role in formulating business outsourcing strategy, and how to choose the most suitable supplier is a problem that enterprise managers need to seriously consider. The selection of outsourcing suppliers is quite difficult, and once the decision is wrong, enterprises will face greater management problems. Generally speaking, when choosing an outsourcing supplier, you must first have a clear purpose-to obtain resources or reduce costs? For different purposes, the selection basis of outsourcing suppliers is also different. When an enterprise decides to adopt a cost-saving scheme, it is not surprising that it wants suppliers to have low prices. Secondly, there should be a scientific evaluation system to evaluate potential outsourcing suppliers, such as input quality, transaction price, delivery date, technical ability, service level and satisfaction. Obviously, the ability of outsourcing suppliers is the key for enterprises to evaluate and select suppliers, and blindly pursuing low prices may damage the quality of outsourcing business and ultimately affect the market performance of enterprises.
5. Management of outsourcing process
Because outsourcing is an intermediate form of market transaction and vertical integration, there is actually a principal-agent relationship between manufacturers and outsourcing suppliers. Outsourcing suppliers have more information about the quality and cost of products and services than manufacturers, which leads to information asymmetry. In addition, the differences in ideas and cultures between the two partners and the poor communication mechanism may lead to the failure of outsourcing. Therefore, it is necessary to strengthen the management of outsourcing process. Therefore, we can solve the problems and contradictions in the outsourcing process and prevent accidents by establishing corresponding management coordination institutions and establishing smooth communication channels. In addition, we can strengthen the supervision of the outsourcing process by refining the outsourcing contract and establishing a quality assurance system, so as to reduce the risks caused by information asymmetry in the outsourcing process.