Compare and contrast outsourcing to independent contracting from the perspective of a company that needs to fulfill an order within a short duration. Which method is better if the company in question is using an innovation-based low-cost strategy?

What will be an ideal response?

Independent contractors must make their own Social Security contributions, pay various employment taxes, and report their income to state and federal authorities. From a legal perspective, whether a worker is an employee or an independent contractor with respect to the company determines the obligations the company has to the worker. If an employee is incorrectly classified as an independent contractor instead of an employee, the company can be liable for employment taxes for that worker, plus a penalty.

An alternative to contingent work is outsourcing the work to another firm. This typically involves contracting with an outside firm that has particular expertise to assume complete responsibility for a specific contracted service,not just to supply workers. Firms often outsource noncore functions, such as their payroll, landscaping, and food service activities.

Offshore outsourcing by opening a location in another country or outsourcing work to an existing company abroad has become increasingly popular for many organizations seeking productivity gains. Companies can strategically use independent contractors to help control costs, temporarily increase capabilities, and bring in needed talents quickly. They can thus be particularly useful for companies competing through innovation or low-cost strategies. Independent contractors often receive a higher salary than do regular employees but do not receive benefits, which can make them cost-effective.