Outsourcing Decision In Aramco
The Outsourcing Decision
1.0 Introduction
In an effort to focus on core functions, reduce costs and increase efficiency, many organizations have been forced to outsource some departments and even divisions. Outsourcing is a common practice in the oil and gas industry and many companies have experimented with it. In fact, British Petroleum has outsourced its IT and accounting operations to other firms in order to concentrate on activities that facilitate improvements in the entire business (Cross, 1995; Outsourcing Center, 1999). This was not an easy task for BP to accomplish, especially in the Information Technology division. However, they wanted to ensure that the process was beneficial and so they experimented with selected outsourcing …show more content…
As the world largest crude oil exporter, the company produces approximately 12.5% of global oil supply (Saudi Aramco, 2017). The company’s headquarters is located in Dhahran, Saudi Arabia and has offices and subsidiaries throughout the country and in various countries including the United States, the UK, China, Singapore, India, Japan, Egypt, Korea, and the Netherlands (Saudi Aamco, 2017). The company has reserves of 261.1 billion barrels of condensate and crude oil reserves and employs in excess of 65,000 workers throughout the world (Saudi Aramco, 2017).
The considerations and opportunities for outsourcing at Aramco are similar. Outsourcing its human resource, IT or accounting function could be beneficial to the company as it would help to reduce the cost of its operations. However, in making the decision Aramco’s management needs to look at the benefits and risks of outsourcing either of these functions. After careful analysis of the benefits and risks, the company’s management would make a decision on which function to …show more content…
They are economic, quality, management, strategy and technology (Yang and Huang, 2000; p. 225). In terms of the country, the team should compare the cost of doing business in different countries, the educational level and quality of the workforce available, and the level of communication technology that exists. This is important because a number of consultancy firms have offices in various countries. Consequently, engaging one in an area where costs are low relative to quality would help to contain costs while at the same time increasing operational
1.0 Introduction
In an effort to focus on core functions, reduce costs and increase efficiency, many organizations have been forced to outsource some departments and even divisions. Outsourcing is a common practice in the oil and gas industry and many companies have experimented with it. In fact, British Petroleum has outsourced its IT and accounting operations to other firms in order to concentrate on activities that facilitate improvements in the entire business (Cross, 1995; Outsourcing Center, 1999). This was not an easy task for BP to accomplish, especially in the Information Technology division. However, they wanted to ensure that the process was beneficial and so they experimented with selected outsourcing …show more content…
As the world largest crude oil exporter, the company produces approximately 12.5% of global oil supply (Saudi Aramco, 2017). The company’s headquarters is located in Dhahran, Saudi Arabia and has offices and subsidiaries throughout the country and in various countries including the United States, the UK, China, Singapore, India, Japan, Egypt, Korea, and the Netherlands (Saudi Aamco, 2017). The company has reserves of 261.1 billion barrels of condensate and crude oil reserves and employs in excess of 65,000 workers throughout the world (Saudi Aramco, 2017).
The considerations and opportunities for outsourcing at Aramco are similar. Outsourcing its human resource, IT or accounting function could be beneficial to the company as it would help to reduce the cost of its operations. However, in making the decision Aramco’s management needs to look at the benefits and risks of outsourcing either of these functions. After careful analysis of the benefits and risks, the company’s management would make a decision on which function to …show more content…
They are economic, quality, management, strategy and technology (Yang and Huang, 2000; p. 225). In terms of the country, the team should compare the cost of doing business in different countries, the educational level and quality of the workforce available, and the level of communication technology that exists. This is important because a number of consultancy firms have offices in various countries. Consequently, engaging one in an area where costs are low relative to quality would help to contain costs while at the same time increasing operational