Hp Outsourcing Case Study

Outsourcing and Hewlett-Packard

To compete in the expanding global market, firms’ continue to seek ways to increase their value by reducing costs through efficiency in an attempt to increase profits which can be achieved by outsourcing. Hewlett-Packard (HP) is company that has incorporated the business plan of logistical outsourcing to India. Outsourcing operations to foreign countries has its benefits as well as disadvantages that the company must harness or overcome to make the venture profitable.

Outsourcing was a necessary financial decision for the global company HP. Outsourcing is the means to how HP is able to provide constant cost control and service excellence to their customers in 176 countries, 24 hours a day, and 7days a week (Demerjian, 2006). India was one of three locations chosen to provide remote support for HP products, through what is known as HP’s Global Center in India. After successfully allowing a subsidiary in India to handle their global accounting activities, HP offered the same services to their client Proctor & Gamble Co (P&G) according to Ribeiro (2004). The Indian facility processes the payments for P&G’s global accounts payable transactions to acquire the perfume ingredients necessary for their products from French cosmetic suppliers (Buggey, 2007). Outsourcing allows HP to meet goals associated with their lower cost business model. This lower cost enables HP to remain cost competitive while meeting the expectations of their expanding global customers.

Outsourcing is a business model used by many companies in an attempt to lower costs, saving money is not the only reason that makes outsourcing beneficial to a company. Increased efficiency, reduction in risk and expansions in the core business are other benefits of out-sourcing (Bowersox, Closs, Cooper & Bowersox, 2013, 396). Using outside sources such as those that are more efficient in research, development, marketing or distribution reduce the associated expenses; giving a company a competitive advantage which can be passed on to their customers. Business investments all carry a certain amount of risk, especially from the ever changing financial markets, government regulations, competition and technologies,