(Production cost management) A large percentage of U.S. companies out¬ source some part of their business processes, which include accounting, cus¬ tomer service, engineering, human resources, information technology, marketing, procurement, and sales. Moreover, many firms are outsourcing operations to other countries where labor rates are much lower in order to stay competitive. Some of the favorite offshore destinations are India, China, the Philippines, Eastern Europe, Costa Rica, Malaysia, and Mexico because these countries provide astronomical savings in costs. For example, India is the leading offshore market for IT development, customer care, engineering, and payroll processing because it provides the highest quality services at the lowest cost worldwide. The trend to outsource mission-critical activities is growing exponentially and will continue to grow in today’s wireless and high-technology business environment.

a. Discuss some benefits and drawbacks to outsourcing the following activ¬ ities: (1) finance, (2) data processing, and (3) travel arrangements.

b. How might outsourcing of manufacturing functions affect the (1) preven¬ tion, (2) appraisal, and (3) failure costs of a company?

c. What effects might outsourcing of each of the activities in part

(a) have on an organization’s employees and their work relationships?

LO1.