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Downsizing and Outsourcing Strategies

The document discusses downsizing, outsourcing, and their implications for organizations. Downsizing refers to the reduction of staff to improve productivity and competitiveness, while outsourcing involves hiring external companies for specific services to focus on core business areas. Both strategies have advantages and disadvantages that need careful consideration before implementation.

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9 views16 pages

Downsizing and Outsourcing Strategies

The document discusses downsizing, outsourcing, and their implications for organizations. Downsizing refers to the reduction of staff to improve productivity and competitiveness, while outsourcing involves hiring external companies for specific services to focus on core business areas. Both strategies have advantages and disadvantages that need careful consideration before implementation.

Translated by

ScribdTranslations
Copyright
© All Rights Reserved
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DOWNSIZING

OUTSOURCING
RIGHTSIZING AND RETHINKING
Mg. MAXIMILIANO VILA SAMANEZ
DOWNSIZING

Mr. MAXIMILIANO VILA SAMANEZ


DEFINITION

The strict meaning of downsizing is: reduction of the


staff template. It is a strategy that seeks to improve
work systems, redesign the organization and a
adjustment of the employee template that allows to maintain
competitiveness. It is a combination of strategies
rightsizing rethinking, that is, to achieve the
optimal organizational size and rethinking the organization.
Downsizing involves the reduction of staff and
equipment to reduce the size of companies,
thus increasing their productivity.
TYPES
1. Strategic or proactive downsizing. It arises when the
the company anticipates the changes that may occur
in the environment. Anticipating environmental change makes
to obtain results more quickly.
The disadvantages of strategic downsizing are
cost reduction, as the number is reduced
of departments that make up the company, and the largest
flexibility of organizations.

2. Reactive downsizing. It is the one that is carried out in response to


the market situation, namely restructuring that
the market demands when different situations arise.
ADVANTAGES
• Increase in productivity. The same results are obtained
results with minimal resources.
• The simplification of the organization's structure
will make internal communication smoother, about
everything between employees and bosses.

• Decision-making is simplified because


the structure is flatter. The disappearance of some
departments allow for more decision-making
calm and in a simpler way.
• The feared and slow bureaucracy is lessened, allowing
that we save time in some processes.
DISADVANTAGES
Not everything was going to be perfect. Downsizing, like anything else
another technique also has some disadvantages, such as
they are relocation problems, unemployment due to
the workforce reduction and the lower loyalty
of the staff to the company, fear may be created among the
employees in light of future restructurings.
EXAMPLES
An emblematic example of downsizing is the company IBM.
that since 1985 has laid off around 100,000 employees,
and, with layoffs or without them, many other companies from
sectors are rapidly shrinking in size. They paint
rude, and although downsizing seems inevitable, less
of course it constitutes a solution. About a sample
of 500 companies that had reduced staff since
In 1987, the American Management Association has
proven that two-thirds of them do not
they experienced the least improvement in terms of
effectiveness, and less than half saw any improvement in their
benefits.
EXAMPLES
the reduction in engine size, a trend that
has been well received in gasoline engines,
it has also been applied to diesel technology.
With the aim of obtaining more fuel consumption
lower and fewer polluting emissions, the main
manufacturers around the world are focusing their efforts on
this address. Beyond the discussions concerning
the CO2 emissions, the expected decrease in reserves
oil in the future and the increasingly strict
pollutant emission controls, the consumption of
flammable is becoming an important factor
in the design of new vehicles.
EXAMPLES
Despite its good economy, diesel engines
they also undergo new requirements to reduce the
fuel consumption and it is at that moment when
the concept of downsizing appears. It can be stated that
is applying downsizing when, using
smaller displacement mechanics achieve efficiencies
totals close to, and even occasionally exceeding, to the
that were previously offered with larger engines
size.
OUTSOURCING

Mr. MAXIMILIANO VILA SAMANEZ


DEFINITION
Outsourcing it is a term from English that we can translate to
Spanish as subcontracting, outsourcing, or outsourcing .
In the business world, it designates the process in which a
organization hires other external companies to
take charge of their activity or production.
The word, as such, is an anglicism that is composed with the
vocesout, que significa‘fuera’,ysource, que traduce‘fuente’u
'origin', that is, external source.
In this regard, outsourcing is closely related
with the , subcontracting
it involves the search for
of services
an external source to the company that can provide in a
efficient certain services, so that it can have at its disposal
more time to focus on the key aspects of your business.
DEFINITION
Many companies outsource in the area of
IT, human resources, accounting and
asset and property management. Others also do it.
they do in user technical support and management of
telephone calls, manufacturing and engineering.
However, outsourcing is a practice that should
be very well analyzed before its application in a
company, as it can have both positive or
as negatives.
Advantages and Disadvantages
Outsourcing, depending on the type of business and its application,
it can present various advantages and disadvantages that must be
analyzed at the time of considering the impact that this may have
in the company.
Advantages
• Among the advantages that outsourcing has for companies,
we can mention the following:
• It allows for a reduction in manufacturing and equipment costs.
• Put more human resources and technology at the disposal of the
company.
• Gives the company the ability to respond and adapt
quickly to business changes.
• It allows the company to focus on the key areas of its business.
• Allows the company to be more competitive.
ADVANTAGES AND DISADVANTAGES
Desventajas
Meanwhile, on its part, some of the disadvantages it may present
The outsourcing for a business are the following:
The costs of outsourcing can end up being higher than expected.
Changing the service provider can be economically and
productively negative.
There is a possibility of losing control over production.
The contracting company can see its work copied and its business
harmed.
It can contribute to the exploitation and dehumanization of the worker.
In offshore outsourcing (subcontracting services for a company
in another country, in order to find cheaper labor), there is a greater
probability of layoffs for workers.
OUTSOURCING OR THIRD-PARTY SERVICES

Although the terms of outsourcing and


outsourcing is used interchangeably, in many
cases the outsourcing reveals the assignment of a
I work for a company outside of my country of origin
of the contracting company, while
the outsourcing reveals contacts and transactions
within the country itself.
PRINTING OUTSOURCING
Theoutsourcing of printing it is a type of outsourcing
requested by companies that constantly require
document printing services and others
materials. In this way, the original company does not have
to worry about printing and copying, since the
the contracted company finds a way to improve the
quality and reduce costs in this area. Thus, these
companies are responsible for managing the
printing equipment, also being responsible for the
technical assistance and the supply of tickets.
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