Labor outsourcing concerns allocation of various procedures to an enterprise. This process incorporates a specialist who serves as an outside provider. The reason is that firms may not be capable to tackle all factors in a trade. In this regard, a section of procedures is executed in a temporary manner. As a result, full-time experts are not recruited to take care of the responsibilities.
A number of production aspects such as labor and capital determine the complete productivity of a firm. Productivity refers to the level of output that is related to events which arise from inputs. Its determination is related to the capability of a firm to reduce costs of production. The focus in an organization can increase labor value and capital inputs. This also replaces inputs of materials that are processed for labor inputs and capital. This implies that for productivity to increase there is a need for the trade-off. It is vital to encourage the four aspects of production (Brockwell, 2008).
Trade off are connected to the land which is a factor that appears to be cheap. In this regard, labor turns out to be less expensive. As a result, it renders the majority of resources out of use which could benefit the labor aspect. This means that capital in firms will increase in a fast way. The major purpose of outsourcing is to reduce expenses of services and products to clients. In addition, labor outsourcing is beneficial when it creates more time for business ventures. This facilitates efficiency especially in activities that are not major in trade.
However, labor outsourcing tends to have a limitation when it exposes details of a private firm to outsiders via sharing events. It also reduces jobs in domestic labor markets which affects the economy of a state in a negative manner. In this regard, organizations are recommended to embrace low labor costs to facilitate its operations.
Brockwell, J. (2008). Global Sourcing: Is It Really Worth It. Supply & Demand Chain Executive, 9(2), 41-43.
Bustinza, O. F., Arias-Aranda, D., & Gutierrez-Gutierrez, L. (2010). Outsourcing, competitive capabilities and performance: an empirical study in service firms. International Journal of Production Economics, 126(2), 276-288.
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