Chapter 2, Problem 4DQ

Explanation of Solution

Similarities and Differences between outsourcing and downsizing:

Outsourcing	Downsizing
Outsourcing is done for a specific business function.	Downsizing is usually performed across the entire company.
Due to poorly written contracts, it carries risk of increased costs.	The direct costs are reduced.
There are chances for an organization to lose control and flexibility in the outsourced area...

Explanation of Solution

Dealing with the negative impacts of downsizing and outsourcing:

• People often misunderstand the terms downsizing and outsourcing, as they consider them as the same thing. However, these terms are entirely different from one another.
• The organizations take the decision of downsizing to save their costs and focus more on their core business as they are going in loss or not earning reasonable profits from their other businesses.
• On the other hand, the decision to outsource is used to improve the efficiency and achieve job specialization...