Niyamath Parveez

Everyone knows the name Intel and they are easily one of the world’s most recognized brands, sitting alongside Coca-Cola, Microsoft and Apple. In fact, you know that Intel is so successful with the fact that Apple changed their manufacturing processes in order to include the Intel chip in their macs. This is high praise indeed for any firm and shows that the power of Intel is something that can make a huge difference to any computer user. However, it is interesting to note that not even a firm like Intel is immune to the difficulties that the current credit crunch brings and the company is looking for ways to reduce their cost, to become leaner and to be more cost effective in their working.

As they can see from a whole host of companies and firms, outsourcing has become a fantastic way to reduce costs whilst obtaining a great level of skill and experience from staff well trained in the processes that the firm has to deliver. Intel may be one of the best firms operating in the market but there is always room for development and their recent decision to outsource should see them benefit in this manner too. It is the Southbridge chips that the firm has decided to outsource and the lucky recipient of this agreement is Advanced Semiconductor Engineering Inc (ASE), who is based in Taiwan. This move will enable Intel to close a number of their assembly and testing warehouses and insiders predict that the companies working revenue could rise by a figure close to 50% in the next quarter. This move indicates why outsourcing is such an attractive proposition to a great number of firms.

Of course, a firm like Intel has to be fully aware that many of their rivals and competitors are keen to learn what makes their chips tick and will attempt to copy and steal their ideas at every opportunity. This means that Intel look to take great care and have a higher level of security over their products and naturally they are mindful of the issues that may arise when using outsourcing firms. It is not that outsourcing firms are not to be trusted but any process which adds an extra layer to the process and involves more people is sadly more likely to run the risk of leaks or information escaping but Intel has made moves to keep their information and products safe from harm. Any firm based in mainland China and suspected of operating in the trade for knockoff chips and processors will not be allowed to buy chips directly from the outsourced producer. Intel are maintaining a strong control over the production and any suspected firm that wishes to buy chips from Intel will be required to purchase and interact directly with Intel. This should give the firm a greater degree of control over their product and alleviate any of the blame or concerns from the outsourced firm. This will work out for the best for all parties and indicates that outsourcing can be managed in such a way to take care of any concerns that a firm may have about security or confidentiality.

There is not a week going by without news of some company reshuffle or collapse or takeover and the names of the firms involved are getting bigger and bigger. The size and scope of some of the firms who are massively struggling in the current financial crisis is possibly the scariest aspect of all and this week saw Sun Microsystems make a disappointing announcement to members of their UK based workforce. The long-term future of the company is always the most important issue in any management decision but the news that 150 jobs in their field service engineering area will be transferred to a third party company before June is a massive blow to staff. News of this move comes as speculation starts to build about the firm drastically lowering costs and attempting to make their books more attractive to a potential buy-out. It is said that firms along the lines of IBM, Apple and Fujitsu are closely monitoring the situation and may be ready to move in.

Industry insiders believe that Sun Microsystems have been in discussions with a number of European based outsourcing specialists in an attempt to outsource their entire field-service operations. An attempt to outsource such a large amount of jobs is a clear indication that the company are experiencing difficulties but the solution offered by this outsourcing may help prolong or resuscitate the business in an extremely difficult time.

Therefore, this outsourcing manoeuvre may buy Sun Microsystems enough time and short-term cash to balance the books in a better style which could guarantee the long-term future of the company. With so many firms going to the wall, anything which can give a firm a better chance of survival and save the vast majority of jobs within an organization is a route worth taking although the job losses are unfortunate. This means that outsourcing can act as a solution to some of the problems which are affecting more and more firms in the modern era.

Whilst this outsourcing is great for Sun Microsystems on the whole, many of the company’s customers will be looking at this decision and wondering what impact it will have on them. It is inevitable that with agents like banks, building societies and agencies working for the government involved on the Sun Microsystems customer base, concerns over data protection and safety of information will be a factor. Although the quality and service offered by the vast majority of outsourcing firms are of the highest standard, it is inevitable there will be concerns about the implications of this decision.

With rumours that the previously considered acquisition of Sun Microsystems by IBM is being considered again, there is more hope for Sun Microsystems executive and employees and this outsourcing decision may be another shot in the arm for the ailing company. With the market in the current state it is, do not be surprised to see a number of other firms looking to follow Sun Microsystems and undertake outsourcing of their own if it can bring them a better chance of survival.