Today, outsourcing, the process of transferring a part of production or business to another company that is an expert in this field, becomes a key practice among such large companies as Dell, eBay, and others. The evidence shows that there are both advantages and disadvantages of outsourcing and related issues. In order to understand eBay’s approach to the given business, this paper will answer a range of questions related to the given case scenario.
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While other companies like Dell decreasing their outsourcing, eBay should not follow the same strategy since its focal outsourcing direction is personnel. If Dell outsources for storage, transportation, and equipment, the fact that eBay is not a physical merchant allows it increasing outsourcing issues (Barney & Hesterly, 2014). For example, it is possible to recommend considering email outsourcing that is likely to be cheaper than a traditional approach to answering customers’ inquiries. By providing proper training to personnel, eBay may achieve greater effectiveness in assisting its customers.
Outsourcing of Trust and Safety presents several limits such as customers’ confidential information, social security number, and other related data, the leakage of which will violate eBay’s operation terms. In particular, the safety of communication is questionable when it is outsourced to an external company, and the investment in this direction is rather costly. More to the point, employees hired by the outsourcing company cannot be checked, which may compromise eBay’s Trust and Safety. Therefore, operations including sensitive data should not be outsourced.
Among the advantages of Build, Operate, Transfer (BOT) strategy proposed by Dalton, one may enumerate low risks, integration of two other alternatives, and future transition of an operations center to eBay. At the same time, the disadvantages are no successful examples of the BOT approach implementation and potentially high management fees (Barney & Hesterly, 2014). The specified strategy is regarded as a hybrid of two other alternatives, which makes it more universal. However, the fact is that the first option implies little cost reduction yet more safety, and the second one, on the contrary, proposes higher risks with the opportunity to reduce costs.
The BOT strategy’s opportunism is associated with the third party vendors in other countries, which can be prevented by means of contract negotiations. Speaking of eBay’s capability, one may note its team that is dedicated to the company’s goals and outsourcing, while being ready for unproven experiments. The flexibility in the given case refers to utilizing the third party vendors as well as possible re-consideration of the strategy after the start-up performance, when the expected outcomes will be more transparent.
It is possible to assume that eBay’s senior management will implement Dalton’s BOT strategy as it is cost-effective and control-related. By introducing this plan, the company will receive the opportunity to increase quality of its services through proper outsourcing. It is also significant to pinpoint that the research made by Dalton is convincing enough to accept her strategy, thus trying an integrated approach with regard to outsourcing.
To conclude, it should be emphasized that outsourcing plays a special role in eBay’s operations since it provides such an important aspect as personnel. Considering that the company strives to reduce costs and enhance quality of services, it is critical to discover new ways of accomplishing the mentioned goals. In this connection, the BOT strategy suggested by Dalton seems to be the most relevant option as it connects two other alternatives.
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Barney, J. B. & Hesterly, W. (2014). Strategic management and competitive advantage: Concepts and cases (5th ed.). Upper Saddle River, NJ: Pearson.