There are many positive reasons why a company would decide to outsource certain functions. Some companies choose to outsource for the convenience and others for the cost benefit. A company must also take into to consideration the negatives and decide what is best for the company before it decides to outsource.
Globalization is one of the main reasons that lead a company to outsource. When talking about globalization, other countries can perform certain tasks cheaper than if they were performed in the US. "Outsourcing can be economically healthy and acceptable. This practice has led to job growth and profits for US Organizations that provide services such as, legal work, Information Technology, banking, consulting and customer service. In order to be effective, managers should understand how globalization impacts their domestic operations and influences the effective management of their human resources around the globe"(Ivancevich, pg113). When a company decides to outsource globally there is much responsibility that is involved with that task. It is important that the company performs its research as to how to successfully outsource to that particular country. One challenge may be customs and work ethic. A company must fully understand the new country.
Another reason to outsource is for a company to not only save money, but to have the convenience of not housing certain departments or functions inside their company. “Outsourcing, sometimes called “staff sourcing” involves paying a fee to a leasing company or professional employer organization (PEO) that handles payroll, employee benefits, and routine Human Resource Management functions for the client company” (Ivancevich, pg 201). An example is that a small organization that might not be able to afford an HR depa ...