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Outsourcing: Focusing on core competencies and delegating non-core functions. Illustrate your essay with specific examples.

Introduction

This paper aims to explore how true is the position of firms pertaining to keeping core competencies while outsourcing everything else to suppliers. The growing trend about outsourcing and off-shoring caused by globalisation trends allows managers to look at this new direction. Significant global changes brought about by technology and globalisation have been occurring recently, causing firms to consider other means of restructuring and reorganising. Friedman (2005) presents this scenario in a metaphorical way, describing the world as flat in terms of commerce and competition, in which all competitors are of equal opportunity and footing. A similar shift of perception is required from firms if they opt to become competitive in a global market where regional, historical, and geographical divisions are increasingly becoming irrelevant. Outsourcing is one of these shifts, in which a firm decides to outsource non-core functions to an outsourcing partner.

Outsourcing as a New Market Trend

This paper agrees with the position that core competencies should be kept in-house by firms while everything else can be outsourced to suppliers. Outsourcing, which means, "certain tasks go elsewhere," allows companies to split their services and manufacturing activities into components, each of which working in the most efficient and cost-effective manner (Friedman, 2005). White and Tastle (2006) describe outsourcing as "the use of resources outside an organization, which generally delegates non-core activities to an external identity." The outsourcing concept has been around for quite sometime, even during the American Revolution where Hessian mercenaries were hired to fight for them. This paper believes that in the firm's point of view, much work may be tremendously accomplished if it would focus its resources and attention on its core competencies and unload itself with non-core functions that may be undertaken for it by suppliers. At present, outsourcing continues to change the way companies operate around the world, seeing through a new wave considered somewhat different, with IT jobs making up the first major wave of outsourced labor. More companies are sending jobs abroad indicating the flow of business process outsourcing, such as payroll jobs, secretarial jobs, and other jobs of "back end office" nature considered non-core functions (Grover 1996, p. 89). The Ross Perot is a living example of a firm that outsources its payroll generation, management, and reporting to an outside organisation so that it may focus its full resources and attention on core activities alone (ibid). At present, the attempt by organisations to manage their resources effectively create an option in which they may outsource at least parts of their functions, such as security services and custodial services which may be outsourced to a local outsourcing company. The concept of outsourcing involves the transfer of a non-core task from one company to another with an objective that such activity will be performed more effectively and efficiently. It may be inferred that the viability of outsourcing is so effective that not only big corporations resort to it, but individuals as well (Arnold 2000, p. 23).

Therefore, the organisation will be enabled to concentrate on its core business by outsourcing its non-core functions, and an important aspect of this is that employees can be put to better use and a huge growth in its core business may be seen eventually.

Conclusion

A firm need not burden itself with all the core competencies and non-core functions commonly associated with its operations. Rather, outsourcing is a practical and viable resort to improving competitive advantage while focusing solely on its core business. With his in view, this paper agrees that managers need to understand and keep in-house their core competencies and have the non-core functions of the firm be outsourced to an outsourcing partner. This would mean focusing only on the core functions needed in accelerating productivity. This stance would spell savings, increase in profits, and improvement of the level of quality, productivity, business performance, and business value on the part of the firm, while preponderance of jobs on the part of the outsourced country. Trailing this path of outsourcing strategy is hence beneficial to organisations.

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