- Download PDF
1 Answer | Add Yours
Outsourcing is virtually always an economic decision. Companies make the decision to purchase components or services from other companies when internal calculations determine that doing so is less expensive than performing the same task in-house. It is a very common practice, and does not necessarily involve interaction with companies based in foreign countries. Outsourcing involves a decision to purchase from a different company, irrespective of where that other company is based.
In the specific case of Adayana Automotive – now simply Adayana since its’ 2009 merger with other companies and subsequent expansion into additional business lines – a decision to contract with it is, again, an economic or financial decision, but one solidly grounded in the dynamic nature of the automotive industry. Automotive technology is in a constant state of evolution, with new models of automobile and new types of automotive components – and the incorporation of computer chips in cars represented a major technological innovation – placing a serious strain on the repair industry in terms of maintaining proficiency in car repair. The financial and organizational burden of maintaining in-house training and education programs to ensure that employees remain technically proficient can be prohibitive. Under such circumstances, outsourcing to a company like Adayana, the business plan for which is entirely structured around finding cost-effective ways to train technicians for client companies, makes tremendous sense.
In addition to the financial consideration, outsourcing to a company like Adayana has the advantage of immersing employees in another corporate culture, the exposure to which can be beneficial in terms both of improving technical proficiency and in learning to work more efficiently in a more diverse environment.
Disadvantages to outsourcing to Adayana begin with its foreign origins. An Indian company, albeit one that maintains corporate headquarters and business operations in the United States, can be a very sensitive issue in an industry that has suffered tremendously over the past 30 years from intense foreign competition. While that foreign competition involved Japan and not India, the stigma associated with outsourcing to foreign companies nevertheless remains potent. Foreign automotive manufacturers, as is well-known, operate large manufacturing facilities in the United States, but the slow death of Detroit’s American automotive industry has placed a very negative connotation on outsourcing to any Asian source.
Another potential disadvantage to outsourcing training to Adayana involves the disclosure of proprietary information that may be involved in such activities. While companies are accustomed to advertising the organizational “walls” separating business lines so that partner companies or clients do not have to worry about the transfer of “trade secrets,” the fear remains that effective training of technicians on one’s own technology will invariably require the sharing of such information.
In free market economies, businesses will always seek the most cost-effective solution to problems, including how to ensure employees remain technically proficient in a dynamic industry. When they determine that the most cost-effective approach involves outsourcing, that is the direction in which they will migrate.
We’ve answered 324,443 questions. We can answer yours, too.Ask a question