International Business Machines Corporation (IBM)

Global Outsourcing

IBM is a Computer Hardware Company in New York. The CEO of the corporation said that CEOs in many organizations have incorporated a global business strategy or in other words, they have moved their business to global environment to increase value and achieve competitive advantage (IBM Corporation, 2008). IBM is not left behind as it has also entered into a global business environment despite the challenges in the environment such as new competitors and demanding customers in the global marketplace. IBM is using a global delivery model-this means that it is moving its resources such is infrastructures, IT skills, and human resource functions, customer service, and the right tools from the corporation to the world (IBM Corporation, 2008).IBM has become aggressive in the global environment using offshore outsourcing. This means that IBM provides its resources and capabilities to meet the needs of clients. A point to note is that the corporation provides a unique combination of resources and expertise to countries such as China, Brazil, and Russia (IBM Corporation, 2008). The corporation has also employed a sustainable business model where project teams create higher-value projects and solve complex business problems.

 

Benefits and risks involved

 Cost advantages- by outsourcing the services, IBM conduct these activities at a lower cost

Higher value initiative- the global delivery model leads to cost savings and thus, the corporation improves IT development, boosts firms' performance, and other advantages (IBM Corporation, 2008). For example, the adjustments on workloads make it easier to focus on successful initiatives and more importantly, improve job security an avoid personnel problems.  The workforce also enjoys working in the IT environment hence increase productivity and efficiency.

 Access to the right skills- outsourcing creates high skilled workers who addresses the problems in the changing business conditions (IBM Corporation, 2008). The high skilled workers use the right tools and methodologies to produce quality products and services. 

 Strategic advantage-The costs saving advantage enables the corporation to invest in new approaches and ideas.

Risks involved

            Although the corporation enjoys cost reduction, financial benefits, and product development, other hidden costs occur when managing the outsource process. For example costs of operations planning, costs of logistics activities, costs of unforeseen risks, and other hidden costs in processes and practices. Also, the corporation may be unable to control the knowledge and skills hence lose the competitive advantage (IBM Corporation, 2008). Another risk involved is reducing innovation level due to lack of knowledge sharing and lack of employee loyalty. However, the risks should be carefully managed to achieve the intended benefits.

 

 

 

 

 

Reference

 IBM Corporation. (2008). Achieving Competitive Advantages through Global Sourcing.  https://www-03.ibm.com/services/ca/fr/cfo/documents/global_sourcing_brochure.pdf