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#Written by David Tam, 1996.           #
#davidkftam@netscape.net Copyright 1999#
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David Tam
October 2, 1996.

                             Business Press Review
                             =====================

Ip, Greg. "Outsourcing becoming a way of life for firms." The Globe and Mail.
Wednesday, October 2, 1996. B8.                           ------------------

    This article was on the topic of outsourcing, or company subcontracting.
We had a similar article presented in the lecture yesterday.  The trend in
business now-a-days is to subcontract a lot of work to smaller, more
specialized companies that have the expertise within that field.  Everything
from legal work, accounting/financial work, human resources, marketing,
maintenance and cleaning, and even research and development are being
contracted out to other companies.  This arising situation is placing stress on
the traditional thinking of large companies, but at the same time, it creates
an enormous amount of opportunities for entrepreneurs.  New industries are
emerging, such as IBM's Celestica, which was formed because of the trend in the
computer industry to subcontract manufacturing work.  From this trend,
Celestica has become North America's third-largest electronics contract
manufacturer.  Celestica's rise has caught the attention of Onex Corp., who
have plans to purchase the IBM subsidiary for $750 million.  Bell Canada has
also embraced this trend and outsources phone line installation and maintenance
to Entourage Technology Solutions Inc., another spin-off from these
opportunities.  As quoted from the article, "Many of these customers have no
internal capability and are attracted to Entourage's skill and ability to reach
end-customers." However, General Motors and Air Canada are having problems with
their unions because of these practices.

    Outsourcing can be a very valuable strategy for entrepreneurs starting up a
business.  Some potential startups can do away with large amounts of startup
capital, overhead, or cash flow.  In addition to cutting costs, this strategy
can help the small business concentrate on what it does best ("core
competences") and improve upon that, while outsourcing other tasks that could
distract from the goals of the business.  In addition, this gives greater
flexibility, better quality, and better timing.  Due to the nature of the free
market, subcontracted companies can usually do a much better job and at a lower
price than if the same tasks were performed through internal sources.  This
reliance on other companies allows small business to extend its corporate
borders to encompass a virtual company consisting of other companies.  Small
businesses also do not need to have all of the expertise within itself.  They
can always subcontract the work to other companies that specialize in that
particular field.  Small businesses can become even more dynamic than they
current are, responding to market demands overnight.  The net effect of this
trend on small businesses is that they can provide better quality products and
services to customers at a lower price.