Cut costs is to outsource by hiring another organization to perform the service

As a manager of an organization, you will often need to find ways to cut costs. One way to cut costs is to outsource by hiring another organization to perform the service. Consider the scenario below.

As a manager for the public outreach department, you realize that the current system for managing outreach issues is outdated. You would like to have a new outreach system developed using the Cloudera platform to help manage big data. However, no one in the organization has the expertise. You will have to outsource the project to save on costs and avoid management problems. Two companies have sent in a bid—one from Vancouver, Canada, and one from Mumbai, India. The bid from India was slightly lower than the bid from Canada. Compose a response that includes the elements listed below.

Define what is meant by outsourcing.
Explain how Peter Drucker’s statement (covered in the textbook in uCertify) about how one company’s back room is another company’s front room pertains to outsourcing. Use an example.
Summarize the management advantages, cost reduction, and risk reduction of outsourcing.
Summarize the outsourcing risks concerning control, long-term costs, and exit strategy.
Discuss which company you would outsource to and why. Does distance matter?

Sample Solution

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