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Positive and Negative Sides of Outsourcing Business

Discuss about the Advantages Of Implementing Outsourcing Business Functions.

Outsourcing is an essential part of modern day business operations, which is mainly implemented by multinational corporations to reduce the cost of business functions. Reduced cost of business operations and increasing the efficiency are the major advantages of implementing Outsourcing business functions. Major examples of outsourcing business is evident from the business activities of American and European Nations, which outsource jobs some other developing countries including India China and Bangladesh. The job opportunities of outsourcing business is not only limited to manufacturing unit, it is also implemented to hire customer service jobs, especially in the form of call centre and back office duties (Lun et al. 2016).

It is important to explore both the positive and negative side of Outsourcing business operations in order to understand its implication in the context of current global environment. This will also help in the matter of improving the existing business environment that is needed to generate high end business opportunities for better levels of business outsourcing. It is also possible to explore the existing economic environment that is needed to understand the future of the job market in the global business environment.

In the given context the current project will aim to highlight the existing literature related to opportunities and challenges in Outsourcing business operation. The advantages and challenges will be discussed in the context of Bangladesh, which is currently regarded as one of the emerging economies in the global platform. The case study of Nike will be discussed in the current context, which will help to understand the importance of Outsourcing business operation in existing external business environment of Bangladesh.

The scope of the current project is limited to discussing positive and negative sides of outsourcing business. It will therefore be possible to discuss upon the existing opportunities that is associated with Outsourcing business. The economic background condition of Bangladesh will be discussed, which will help to understand the current business environment that is favorable in implementing Outsourcing business. It is therefore be possible to discuss the business opportunity for Nike, which is currently outsourcing business jobs from Bangladesh.

The scope of the project includes exploring the given business environment of Bangladesh that will help to predict the future economic trends of the nation. The government reports and existing literature will be discussed, it will be possible to highlight on the existing gaps of literature and suggest the ways that can be implemented by the Bangladesh government to overcome the existing challenges related to the outsourcing business. 

The existing demographic environment of Bangladesh provides high level of business opportunity for outsourcing. This is mainly possible due to the ease of word constraint that is motivated by the government policy of encouraging foreign cash flow. The IT segment is mostly benefited with the policy of outsourcing business, which has allowed Bangladesh to be one of the major players in global economy. The country is also arising as one of the favorite Outsourcing Destination for foreign business. As mentioned by Kaur and Sharma (2017), the Outsourcing business is mainly driven by advanced level of data that are gathered from client-server sources. It is also possible for the foreign business organizations provide better quality of end to end customer service.

Economic Background of Bangladesh

Bangladesh is regarded as one of the uprising economies, which is considered alongside the BRICS Nations due the ability to encourage international business. Being in the next door of India which is the fastest growing economy of the world, Bangladesh is able to make full use of its geographic location in encouraging business operations from foreign multinational brands. As labor cost in neighboring India and China is rising at a rapid rate, the foreign business organizations are looking forward to the existing opportunity in Bangladesh. This is added with the fact that people in Bangladesh are looking for high sustainable job market in Outsourcing business.


Choi et al. (2017), have mentioned that with the help of effective Outsourcing business strategy, it is possible to generate greater potential in business operations that can identify all forms of external business risks. It is also possible fanatical multinational corporations to focus upon soft skills generation, which is implemented in the form of effective business communication. As outsourcing business is generated in Bangladesh, by the American multinational company Nike, it is possible to improve on the cultural diversity levels. Hence, as highlighted by Chatzoudes et al. (2015), improving the motivation level of the workers by increasing their cultural awareness is one of the major advantages of outsourcing business. This is more evident in case of, two nations which share business functions and are highly culturally diverse. It is also essential to improve upon the existing business infrastructure to make most use of outsourcing business opportunity (Sople 2016). This is generated in the form of improving the existing technological infrastructure of the nation, which has direct implication on business communication strategies.

The Nike brand is currently one of the biggest in the sportswear industry, which has its market in all the nations across the global platform. The manufacturing units of the company are spread all around the globe, which helps them to provide better and efficient supply chain. The quality of the supply chain can be improved to deal with the challenges of outsourcing.

Decreasing the cost of recruiting employees is one of the major advantages, which is associated with Outsourcing business for Nike. The company is able to recruit more number of people from the Asian countries like India, China and Bangladesh, which supports them with efficient customer care service. Hence, as mentioned by Chou et al. (2015), one of the main advantages in the given context of outsourcing business is the ability to reduce the cost of operations. For Nike this cost helps in the purpose of investment in the marketing strategies that is an essential part of higher growth rate of the company.

The Nike Company is currently facing high level of competition rivals from other sports goods brands including Adidas and, Reebok. With better quality of Outsourcing business it is possible to improve upon the supply chain and easily reach out to the customers with better and more volume of products. Hence, the ability of the company to make use of outsourcing business opportunity has an important role in deciding on the competitive advantage policies (Lacity and Willcocks 2013).

Opportunities Associated with Outsourcing Business

 The tax laws in the American region are one of the major business challenges that restrict the growth of business. The cost of supply chain also increases due to high level of import duty implemented by the Federal government. In the given context, Nike can make use of the available business opportunity Outsourcing business operation to reduce the operational cost. It can therefore be said the increased financial opportunity is an essential element associated with outsourcing business function from Bangladesh (Mahmood 2015).


Sports goods industry is mainly dependent upon Outsourcing sponsorship, which is a major part of the marketing strategy. From the findings of Motahari-Nezhad et al. (2009), it is evident that the resource based view for outsourcing business performance is essential in the context of sports goods industry. Nevertheless, the Outsourcing opportunity is highly dependent of an internal and external business opportunity that can help to generate higher business performance. It is important to make use of integrative conceptual framework, which can increase the understanding of outsourcing business opportunity. The higher level of sponsorship in the sports goods industry is related with the business opportunity that can lead to generate higher level of sustainability in the existing business environment (Liu et al. 2017). The outsourcing market of the sports industry is currently growing at rapid rates for increased efficiency that are needed to understand the changes that occur in the external business environment.

As mentioned by Mahmood (2015), one of the major advantages of Bangladesh is due to its demographic location that can help in the foreign companies to increase the business trading opportunities. The company is able to make use of this as the future business sustainable chance that can help them to gain significant competitive advantages. In the given context, it is possible for the Nike Company to make use of the available business opportunity that is associated with that is associated with the business environment in Bangladesh. The business opportunity for the sports brand is also high in the region of Bangladesh compared to that of the other Asian regions.

Lacity and Willcocks (2017), has mentioned that the expenditure at the initial market entry level is one of the major disadvantages for the outsourcing business that can increase the cost of business operations. The cost of the market entry in Bangladesh is quite lower due to the fact that there are lower levels of business competition that can affect the business performance of the foreign companies. The lower cost of labour recruitment can help the Nike Company to lower their cost of customer care service. There is also the scale of KPMG that indicates the lower level of cost at the market entry levels at Bangladesh. This is associated with the fact that due to increased levels of trade competition in the neighbouring India and china, the foreign companies are facing the issues of lack of business operational resources. These issues can be resolved in Bangladesh as the government is able to provide greater opportunity in the forms of lowering market entry tax and are able to provide high skilled human resources. This is promoted in the forms of promoting soft skills development program (Askari et al. 2015).

Future Economic Trends of Bangladesh

According to Schulte et al. (2015), outsourcing business operation in a region is highly dependent upon the inflation rate in the local economy. The rate of marketing entry is highly dependent on the fluctuation in the inflation rate. Due to the stable nature of inflation rate in Bangladesh economy it is possible for the foreign companies to gain rapid access in the market with the aim of having sustainable future business growth. The government is also able to implement permanent tax opportunity that can help in the process of having steady rise of the market. It is also possible to predict the growing job demand in the market of Bangladesh that can generate greater potential in the workplace of Nike.

According to Gerbl et al. (2015), one the major challenges and drawbacks in the business opportunity in the Outsourcing business operations is associated with the security issues of data breach. As essential company information is being shared with third party agent, the company is at the risk of losing the legal right of intellectual property. The outsourcing agents can make misuse of the company information that is needed to protect the data related to essential business transaction. Due to the poor technology infrastructure in Bangladesh, the Nike Company is at the risk of losing the information about the financial transaction and internal business operations. Another area of challenge in Outsourcing business operation from Bangladesh include poor development of soft skill generation that are needed to deal with complex level of outsourcing business operation. The call centre activities are mainly dependent upon high bandwidth speed as a part of internet communication. Hence, it will not be possible to implement advanced form of business communication that is needed to gain competitive advantage and make full utilisation of outsourcing business (Sople 2016).


The financial transaction is one of the major areas of issues that are associated with most of the business operations in the outsourcing department. As companies are aiming to cut down their cost of financial transactions, there are higher levels of ethical risks that can compromise on the quality of business (Betz et al. 2014). In the context of the existing business environment in Bangladesh, the Nike Company can face the issues of payment as they aim to outsource the freelance service for their customer support.  The business economic transaction in Bangladesh is mainly dependent on traditional techniques as most of the companies are not able to overcome the strategic needs for the digital forms of payment. In spite of limited trade transactions the local authority in Bangladesh has not allowed the tax free business transactions that is usually need for outsourcing the business. Added with the issue of low internet and poor digital infrastructure it is not possible for the nation to fully implement fully digitized forms of payment (Askari et al. 2015).   

Changes in Global Business Environment explain the major challenge all type of outsourcing business operations. The American government is recently imposing higher level of restriction in Outsourcing business as it is causing economic issues in the internal environment of the country. This is mostly due to lack of job opportunity, which is lost as most the multinational companies are hiring jobs at much lower cost in the Asian regions (Askari et al. 2015).

Case Study of Nike in the External Business Environment of Bangladesh

Another major challenges associated with Outsourcing business is associated with talent and human resource wastage. As the companies are hiring most of the business functions from outside third party agents, the internal talent management program is not implemented to make most use of available human resources. It is therefore not possible to generate internal talent within an organisation that is needed to maintain workplace sustainability. The internal stakeholders of the company is also not able to implement effective communication with client and external stakeholders as most of the communication strategies are implemented by external outsourcing agents (Chen et al. 2015). Hence, the companies have to face the issue related to the poor business communication that can compromise the efficiency of business operations in the fast moving competitive business environment.

The issues of cultural diversity difference between US and Bangladesh is also one of the root causes of the business communication issues. This proves that the leadership goals of Nike have failed to improve the levels of cultural awareness within the internal business workplaces.

Conclusion and Recommendations  

Existing literature has been able to highlight of on the positive and negative sides of outsourcing business in the context of existing condition in Bangladesh. The Nike company is planning to hire outsource job opportunities in the market of Bangladesh. The major advantage of Nike in the context of outsourcing business in Bangladesh is associated with stability economic condition. Government policies of encouraging higher foreign cash flow are also added in the given context that can help to overcome the challenge at market entry level. The stable inflation rate in the internal economic environment of Bangladesh can help the Nike Company to overcome the challenge of unpredictable future condition. It will also impossible to achieve greater business sustainability in the context of internal business environment. The demographic location of the country is also one of the major advantages, where companies are able to invest more due to the added opportunity that is available in India and China.

Other hand, the major challenge in the context of Bangladesh is due to poor technological infrastructure. This is believed to be a major challenge for implementing advanced form of business communication that is highly essential in Outsourcing business operation.

It is therefore recommended for future research work to suggest strategies that can be implemented to improve the existing IT infrastructure in Bangladesh that can be used for as a part of advanced forms of digital payments. It is also essential to improve upon the cultural awareness to reduce the gap between America and Bangladesh in the context of business communication.

References

Askari, M.M.U.R., Zabeen, S.S. and Uddin, K.M., 2015. Problems and Prospects of IT and IT Enabled Services Outsourcing in Bangladesh. Journal of Tariff and Trade, p.34.

Betz, S., Oberweis, A. and Stephan, R., 2014. Knowledge transfer in offshore outsourcing software development projects: an analysis of the challenges and solutions from German clients. Expert Systems, 31(3), pp.282-297.

Chatzoudes, D., Chatzoglou, P. and Vraimaki, E., 2015. The central role of knowledge management in business operations: Developing a new conceptual framework.  Business Process Management Journal, 21(5), pp.1117-1139.

Chen, H.M., Kazman, R., Haziyev, S. and Hrytsay, O., 2015, May. Big data system development: An embedded case study with a global outsourcing firm. In Proceedings of the First International Workshop on BIG Data Software Engineering (pp. 44-50). IEEE Press.

Choi, T.M., Chan, H.K. and Yue, X., 2017. Recent development in big data analytics for business operations and risk management. IEEE transactions on cybernetics, 47(1), pp.81-92.

Chou, S.W., Techatassanasoontorn, A.A. and Hung, I.H., 2015. Understanding commitment in business process outsourcing relationships. Information & Management, 52(1), pp.30-43.

Gerbl, M., McIvor, R., Loane, S. and Humphreys, P., 2015. A multi-theory approach to understanding the business process outsourcing decision. Journal of World Business, 50(3), pp.505-518.

Kaur, K. and Sharma, R., 2017, July. Critical: Threat model for an outsourcing business. In Computing, Communication and Networking Technologies (ICCCNT), 2017 8th International Conference on (pp. 1-5). IEEE.

Lacity, M. and Willcocks, L., 2017. Conflict resolution in business services outsourcing relationships. The Journal of Strategic Information Systems, 26(2), pp.80-100.

Lacity, M.C. and Willcocks, L.P., 2013. Outsourcing business processes for innovation. MIT Sloan management review, 54(3), p.63.

Liu, S., Wang, L. and Huang, W.W., 2017. Effects of process and outcome controls on business process outsourcing performance: Moderating roles of vendor and client capability risks. European Journal of Operational Research, 260(3), pp.1115-1128.

Lun, Y.V., Shang, K.C., Lai, K.H. and Cheng, T.C.E., 2016. Examining the influence of organizational capability in innovative business operations and the mediation of profitability on customer satisfaction: An application in intermodal transport operators in Taiwan. International Journal of Production Economics, 171, pp.179-188.

Mahmood, S.A., 2015. Prospects and challenges of outsourcing to Bangladesh.

Motahari-Nezhad, H.R., Stephenson, B. and Singhal, S., 2009. Outsourcing business to cloud computing services: Opportunities and challenges. IEEE Internet Computing, 10(4), pp.1-17.

Schulte, S., Janiesch, C., Venugopal, S., Weber, I. and Hoenisch, P., 2015. Elastic Business Process Management: State of the art and open challenges for BPM in the cloud. Future Generation Computer Systems, 46, pp.36-50.

Sople, V.V., 2016. Business process outsourcing a supply chain of expertises. PHI Learning Pvt. Ltd..

Sople, V.V., 2016. Business process outsourcing a supply chain of expertises. PHI Learning Pvt. Ltd.

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