The entrepreneurial view of global outsourcing and offshoring with in the Palestinian business market
The entrepreneurial view of global outsourcing and offshoring with in the Palestinian business market
C
hapter 2 : Literature Review
Outsourcing:
Reasons for outsourcing
There are many different reasons for outsourcing. Soliman (2003) believed in four main reasons for out souring based on his research of previews studies. First as a strategic decision, outsourcing allows organizations to focus on core competencies rather then other field that take up more time and are less important for competition (Quinn and Hilmer, 1994). Second, one of the most common of reasons was to reduce the cost with in the organization (Alpar and Saharia, 1995, McFarlan and Nolan, 1995). Another reason was the lack of abilities (Grover et al, 1994) its competitions pressure (Lacity et al, 1994), problems with in the politics with in the organization (Lacity and Hirschheim, 1993), problems within organizations environment such as the economy (Smith et al, 1998). The last was limited to the information system of an organization, to utilize the internet to make decisions in production cost advantage, transaction costs, asset specificity, internal expertise, maturity of technology, application service providers value chain, and application media fit (Chen and Soliman, 2002). Ghodeswar and Vaidyanathan (2008), state that it helps rapidly improves performance and lowers operation costs based on (Kakabadse and Kakabadse, 2003). They also believed that improving organizational focus, mitigate risk, reach competitive edge, explained its technology abilities, and have more resources for core competences (Bartell, 1998) The competition of multinational organizations over competitive edge also lead to outsourcing (Park, 2000)
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Outsourcing:
Benefits of outsourcing
There are a large amount of benefits of outsourcing for both the outsourcing organization and the organization that the job is assigned to. Here we take a look of at the benefits of the outsourcing organization. Organizations that outsource application services would benefit from paying for only when the job is needed, constant improvement without large additional cost, and the ability to access the service from where and when ever they want (Beale and Lindqhist, 2000), which was mentioned by (Soliman, 2003). Soliman (2003) also stated that there is a reduction in support cost, and do not need large investments in new hardware and software, which he found in his research by (reed, 2000). Kashmeri (2003) supported this idea by saying that there is less cost because there was no need to buy licensing of software (Soliman, 2003). Because of outsourcing, organization have more time and resources to focus on core competences and also they become more flexible and dynamic making it easier to change and take advantage of opportunities (Ghodeswar and Vaidyanathan, 2008). Ghodeswar and Vaidyanathan (2008) also stated that manufacturers had their own benefits such as R&D, product design, operation design, logistics, and marketing mixes can be outsourced to organizations that have more experience and benefit form them while still working on the area that they are good at and have a competitive edge in. Other things as the entering of larger markets and economies of scale as an investment in organizations in to the future (Knight and Jones. 2007)
Outsourcing:
Areas of outsourcing
Organizations can outsource different areas and different fields. Common areas of outsourcing are information technology, human resource, manufacturing, and marketing. Organizations use service providers when they out source like printing, legal issues, accounting department, telecommunications, maintenance, security, and even recruitment of employees (Ghodeswar and Vaidyanathan, 2008).
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