Outsourcing to China

In: Computers and Technology

Submitted By ilberry
Words 1499
Pages 6
What are the pros and cons of outsourcing to China?

The Objective is to explore key factors and pros and cons in outsourcing to China. Research findings identify obstacles faced by both parties in outsourcing. Economic factors are motivational factors in outsourcing to China. Cost reduction, savings, and investment reductions are the main concerns. Benefits focus on core competence, flexibility, and market penetration. Companies in China have ran across several obstacles such as poor communication and lack of preparation.
Common Approaches
There appears to be three commonly used approaches to outsourcing decisions (as also noted by Bolumole et al. 2007): transaction cost economics, resource based theory, and network theory. Other researchers have explained differences between these approaches(e.g. Mayer and Salomon 2006)
Service Provider
The vast majority of Chinese enterprises dealing with outsourcing have a single service provider. The Chinese enterprise must establish the right business requirements in order to be successful. Some of the first generations of outsourcing the senior management teams were not very happy with the results of the first few years. The management did not understand how to construct a sourcing strategy to meet the business needs. Management was unclear about the outcomes expected from outsourcing with the provider. In order to prevent unrealistic expectations they found planning to be extremely important to develop the proper requirements. These actions must align the organizational business objective with the IT sourcing decisions. During the planning process issues on how the product and services need should be addressed. It critically important to build a strategy to meet business needs. The managers should start with clear and reachable objectives. Different unit managers should be included in the management…...

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