Bus 525 Strategic Management in a Globalized Society

OUTSOURCING

BN160676

Aanand Sagar Singh

BUS525 Strategic Management In a Globalized Society

Professor: Nino

Westcliff University

16/04/2017

ABSTRACT

This paper focuses on the core concept of outsourcing. This report has full description about two different companies that have entered into outsourcing agreements with firms with specialized services. The value chain activities carried out by the two different companies are beautifully described to make anyone understand about the concept. After going through this report, you might find how beneficial is outsourcing for a company. Moreover, this study confirms whether those particular companies are using strategic alliances for outsourcing or not.

Keywords: Outsourcing, Value chain activities, Strategic Alliance

Outsourcing is a contractual agreement between two organizations that involves the exchange of service, manpower, and payments (Overby, S., 2007). It is the transfer of individuals or assets from one organization to another. Simply, an outsourcing means delegating the control of serving agents to any private organization. Outsourcing might be a cost saving technique of an organization that helps it get portions of works done by transferring the work to outsiders. However, there must be signed agreement between the needy and the provider, regarding outsourcing. For example: Suppose, a Human Resource company named Kantipur Management Pvt. Ltd. has a contract with a distributor company named United Distributors Nepal. The Kantipur Management provides needed employees to the United Distributors. Also, the Kantipur Management is the responsible agents for releasing the salary of those individuals whom they refer as employees to the General Distributors. This is the general concept for outsourcing, prevailing in Nepal.

The two different companies of our nation which have been benefitted by outsourcing are as follows:

1. United Distributors Nepal

2. EB Pearls

United Distributors Nepal (UDN)

United Distributors Nepal is one of the leading business houses of Nepal established in the year 2000. It is the largest distributor of FMCG goods, having annual turnover of more than $35 million. The UDN consists of more than 300 employees and is recognized as one of the highest tax paying corporate houses of Nepal. The UDN has entered into an outsourcing agreement with the Kantipur Jobs (kantipurjob.com). Also being known as Kantipur Management Pvt. Ltd. (KMPL), it has been one of the biggest human resource service provider companies since 2012. Their reliable service has made them expert in this field.

Value chain activities of outsourcing

“A value chain is a set of activities that an organization carries out to create value to its customers”(Porter, M. 1985). The United Distributors HR seeks for people when they have job vacancies. These vacancies are fulfilled by the human resource referred by the Kantipur Management, since they are responsible for searching job-needy people. The UDN Human Resource asks the KMPL to send them employees according to the company’s demand and eligibility criteria. The people who come to KMPL asking for job, thus is referred to the UDN to fulfill vacancies, regarding their eligibility. The UDN pays agreed amount of money to the KMPL for their service. However, the salary and certificates of the selected employee will be released according to the agreement by the KMPL, not by the UDN. This is how, they are facilitating each other.

EB Pearls

After its establishment in 2005, EB Pearls has grown rapidly as has been one of the biggest digital serving agents. Besides Nepal, the company’s offices are also situated in the UK and Australia. More than 150 people are working for this IT Company according to the recent findings. The belief of EB Pearls is “Service is a religion and clients are GOD”. EB Pearls is another company that is also indulged in the business of working with another Human Resource Recruiting company named First Job Nepal Pvt. Ltd (FJNPL). The FJNPL was established in 3 years back, i.e. in 2014. It provides Human Resource solutions, recruitment and placement in various sectors of different institutions. This organization is distinct because of its versatility, reliability, and expertise in this field.

Value chain activities of Outsourcing

EB Pearls choose First Job Nepal as their service partners for HR solutions, because the FJBPL was expert in this service sector. They were able to minimize turnover of the employees, controlling the