Virtual developments in outsourcing strategies and solutions are very dependent upon technology applications and platforms. However, a significant percentage of virtual solutions with respect to outsourcing and offshoring in the virtual environment also depend upon business process reengineering and conceptual reallocation of a firm’s value chain. These conclusions are based upon the observation that:
Most companies create a major portion of their incremental value and draw their real competitive advantage from relatively few activities, which are generally services…At each stage, technology has increased the relative power of services to the point where they dominate virtually all companies’ value chains. (Giao, de Miranda & de Vasconcellos, 2008)
Thus, in order for firms to be successful at outsourcing within a virtual environment, they must first be willing to redefine themselves into more sophisticated and abstract forms.
The virtual environment is one which depends upon technological infrastructure but it is also one that is based upon sophisticated networks of activities. Firms that have become successful at outsourcing to markets such as China are those that have come to recognize that specialization is one of the most important concepts in the contemporary marketplace. This conceptual fragmentation is mirrored within outsourcing organizations in which: “Labour processes are stretched over organizational boundaries, partly leading to geographically distributed work. Workforces are divided and have different and…multiple employers” (Flecker, 2009). The point being made is that virtual outsourcing solutions employed to compensate for rising costs in other areas of operation express significant influence on the structure of the firms that employ such virtual solutions.
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