Business|Adults|Pre-Int|11. Outsourcing and offshoring

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Read the quotation and answer the questions

«Instead of outsourcing raw materials from another company, Chanel has its own farm which produces its own raw materials.»

— Alain Wertheimer

Alain Wertheimer (born September 28, 1948) is a French businessman based in France who, with his brother Gerard, own the controlling interest in the House of Chanel.


1. What is outsourcing ?

2. What kinds of services do companies outsource?

3. Which regions of the world are well-known for providing outsourcing services for companies in the West?

4. What’s the difference between outsourcing and offshoring?

5. Does your company outsource any work?

6. What are the advantages and disadvantages of outsourcing a production process?

7. What are the advantages and disadvantages of offshoring?


Skim the article to get a general idea of what it is about. Choose the paragraph number below to show where you read about the following

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Waratah is a clothing company based in Sydney, Australia. The company experienced problems when it tried to outsource its production in Sydney and also when it produced the clothes itself (in-house production). Their clothes are now made outside Australia.


1. Ruth and Eileen Miller grew up in a family where making clothes was common. Their mother regularly made clothes for herself and her two daughters. The two girls were able to design and make their own outfits by the time they were teenagers. Now they run ‘Waratah’, a clothing company based in Sydney.

2. The Waratah label started to establish itself in the mid-1990s. At first, the Miller sisters used a number of outside manufacturers to produce their clothes. In 1995, however, they decided to bring the production in-house. ‘We found the outside suppliers very difficult to manage,’ says Eileen. ‘They were often unreliable and we always had problems with getting clothes to our customers on time. We needed more control, so we decided to do the manufacturing ourselves.’

3. In fact, the switch to in-house production led to its own set of problems. It was hard to find new staff, and labour costs were rising. Because of this, the Miller sisters found it impossible to raise productivity beyond a certain level.

4. In 2003, the sisters decided to adopt a different system and closed down the manufacturing section of the business. Now, designing and making up samples takes place in Sydney, but the company outsources its production to other countries. At first, they used manufacturers in India, but now they also outsource to China where they are developing new production methods. ‘We still do all the main work in Sydney,’ says Eileen, ‘but offshoring has brought down our staff costs. Having the production labour abroad can be complicated, but the quality is excellent.’

5. The company already exports some of its clothing to the Middle East and now they are looking to promote the brand in new markets. The Waratah garment sizing especially suits Indonesian markets, so that will be their next target. They are also considering going into partnership with another established manufacturer.

Complete the table with the advantages and disadvantages below

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Choose the correct answer to the questions below


Exam tip

Part 5 Multiple choice

This part tests candidates’ reading for gist and specific information and presents a single text accompanied by six multiple-choice comprehension questions.
The text is informative and is often taken from a leaflet or a newspaper or magazine article. Candidates are expected to employ more complex reading strategies in this task, in which they should demonstrate their ability:

  • to extract relevant information,
  • to read for gist and detail,
  • to scan the text for specific information,
  • and to understand the purpose of the writer and the audience for which the text is intended.

Read the article again and choose the correct answer for each of the questions

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1. Ruth and Eileen Miller grew up in a family where making clothes was common. Their mother regularly made clothes for herself and her two daughters. The two girls were able to design and make their own outfits by the time they were teenagers. Now they run ‘Waratah’, a clothing company based in Sydney.

2. The Waratah label started to establish itself in the mid-1990s. At first, the Miller sisters used a number of outside manufacturers to produce their clothes. In 1995, however, they decided to bring the production in-house. ‘We found the outside suppliers very difficult to manage,’ says Eileen. ‘They were often unreliable and we always had problems with getting clothes to our customers on time. We needed more control, so we decided to do the manufacturing ourselves.’

3. In fact, the switch to in-house production led to its own set of problems. It was hard to find new staff, and labour costs were rising. Because of this, the Miller sisters found it impossible to raise productivity beyond a certain level.

4. In 2003, the sisters decided to adopt a different system and closed down the manufacturing section of the business. Now, designing and making up samples takes place in Sydney, but the company outsources its production to other countries. At first, they used manufacturers in India, but now they also outsource to China where they are developing new production methods. ‘We still do all the main work in Sydney,’ says Eileen, ‘but offshoring has brought down our staff costs. Having the production labour abroad can be complicated, but the quality is excellent.’

5. The company already exports some of its clothing to the Middle East and now they are looking to promote the brand in new markets. The Waratah garment sizing especially suits Indonesian markets, so that will be their next target. They are also considering going into partnership with another established manufacturer.


Read the information about the speakers. Then listen to the conversation and decide what is outsourced for each company

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Tony McGregor works for an advertising agency. Irma Badami works for a small pharmaceutical company. They are discussing what is outsourced in their companies.

So, Tony, what services does your advertising agency outsource?
Well, cleaning for a start. We contract a private cleaning service to clean our offices because the building is so big.
Aah. That wouldn’t work for us. You see the machines in the factory need to be cleaned by professionals, so we employ our own cleaners.
Really? And how about maintenance?
We outsourced this until the last year, but now we employ three technicians. We need experts to look after the machines.
Right. We outsource to a maintenance company.
Do you?
Yes, it costs us less to contract a private company than to employ our own maintenance people.
Mmm. What about IT? Who looks after your computers?
We’ve got our own IT department because the programs are so specialized. How about you?
No, we outsource to a local IT company. We haven’t got enough computers to need our own technicians.
How about human resources?
We’ve only got about 50 employees, so we’ve got an agency which finds new staff for us when we need them. I suppose you employ your own staff?
Absolutely. The HR department is quiet big, so it can do all the employing itself. We outsource the training, though, because there’s so much of it.
We outsource training too, because we don’t need it very often.
What else? I know, the canteen. Have you got your own cooks?
No, the catering is outsourced to another company because only a few employees use the service. And you?
Oh, yes, we outsource, too, so that we get a better service. Talking of food, I’m hungry. Do you fancy going out for lunch?

Advertising agency Reason Pharmaceutical company Reason
Cleaning Yes building is so big No machines need to be cleaned by professionals
Maintenance Yes costs less No need experts to look after the machines
IT No programs are so specialized Yes don’t have many computers
Human Resources No HR department is quite big Yes only 50 employees
Training Yes so much training has to be outsourced Yes don’t need this very often
Food and catering Yes get a better service Yes only a few employees use the service

Read the exam tips

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Exam tip

Part 4

3-Option Multiple choice

This part contains a longer listening text which generally takes the form of an interview, or a discussion between two or possibly more speakers. This piece of listening is heard twice.

There are eight 3-option multiple-choice questions on the question paper and these are always in a written format.

In this part of the Listening component, candidates are being tested on their ability to:

  • understand the gist of a longer text;
  • extract detailed information;
  • extract specific information as required by the questions.

Candidates may also be tested on the speakers’ opinions.


Choose the correct answers to the questions below

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You will hear a conversation between Tony and Irma again. For each question choose the correct answer

So, Tony, what services does your advertising agency outsource?
Well, cleaning for a start. We contract a private cleaning service to clean our offices because the building is so big.
Aah. That wouldn’t work for us. You see the machines in the factory need to be cleaned by professionals, so we employ our own cleaners.
Really? And how about maintenance?
We outsourced this until the last year, but now we employ three technicians. We need experts to look after the machines.
Right. We outsource to a maintenance company.
Do you?
Yes, it costs us less to contract a private company than to employ our own maintenance people.
Mmm. What about IT? Who looks after your computers?
We’ve got our own IT department because the programs are so specialized. How about you?
No, we outsource to a local IT company. We haven’t got enough computers to need our own technicians.
How about human resources?
We’ve only got about 50 employees, so we’ve got an agency which finds new staff for us when we need them. I suppose you employ your own staff?
Absolutely. The HR department is quiet big, so it can do all the employing itself. We outsource the training, though, because there’s so much of it.
We outsource training too, because we don’t need it very often.
What else? I know, the canteen. Have you got your own cooks?
No, the catering is outsourced to another company because only a few employees use the service. And you?
Oh, yes, we outsource, too, so that we get a better service. Talking of food, I’m hungry. Do you fancy going out for lunch?


Advertising agency Reason Pharmaceutical company Reason
Cleaning Yes building is so big No machines need to be cleaned by professionals
Maintenance Yes costs less No need experts to look after the machines
IT No programs are so specialized Yes don’t have many computers
Human Resources No HR department is quite big Yes only 50 employees
Training Yes so much training has to be outsourced Yes don’t need this very often
Food and catering Yes get a better service Yes only a few employees use the service

I want to discuss outsourcing in…

As in the example, talk about outsourcing using:

  • the passive voice of the verbs in the brackets;
  • the information provided in the table.

✔️ The pharmaceutical company is cleaned by its own employees because machines need to be cleaned by professionals.

Services Pharmaceutical company Reason
Cleaning (clean) No machines need to be cleaned by professionals
Maintenance (do) No need experts to look after the machines
IT (provide) No don’t have many computers
Human Resources (employ) Yes only 50 employees
Training (carry out) Yes don’t need this very often
Food and catering (cook) Yes not many employees use the service

Additional information

  1. The pharmaceutical company is cleaned by its own employees because machines need to be cleaned by professionals.
  2. The maintenance in the pharmaceutical company is done by its own employees because experts are needed to look after the machines.
  3. The IT is provided by the private IT company because they don’t have many computers.
  4. The staff is employed by the private recruitment company because there are only 50 employees.
  5. The training is carried out by a private training company because they don’t need this very often.
  6. The food and catering is cooked by a private cooking company because not many employees use this service.

As in the example, talk about outsourcing using:

  • the passive voice of the verbs in the brackets;
  • the information provided in the table.

✔️ The advertising agency is cleaned by a private cleaning service because the building is so big.

Services Advertising agency Reason
Cleaning (clean) Yes building is so big
Maintenance (do) Yes costs less
IT (provide) No programs are so specialized
Human Resources (employ) No HR department is quite big
Training (carry out) Yes so much training has to be outsourced
Food and catering (cook) Yes to get a better service

Additional information

  1. The advertising agency is cleaned by a private cleaning service because the building is so big.
  2. The maintenance in the advertising agency is done by a private maintenance company because it costs less.
  3. The IT is provided by the advertising agency itself because programs are so specialized.
  4. The staff is employed by the HR of the advertising agency because HR department is quite big.
  5. The training is carried out by a private training company because so much training has to be outsourced.
  6. The food and catering is cooked by a private cooking company to get a better service.

Listen to the Deloitte company predictions on the outsourcing in the year of 2000 and fill in the spaces with the missing phrases


Outsourcing on the increase International financial firms are on a course to increase by five times the number of jobs they move overseas. This is according to a new report from the accounting company Deloitte Touche Tohmatsu. This shift to outsourcing, or offshoring, will help cut staffing costs. Some companies will see up to seven percent of their global staff working in offshore bases. Two million financial services jobs in IT, HR and call centers will be based offshore by 2010. The good news for investors is the tripling of savings from $5 billion to $16 billion. Outsourcing has the true potential for huge cost savings.

Deloitte said outsourcing is mistakenly being used as a short-term strategy because many companies experience a sharp fall in cost savings after several years. The report stressed that: «Offshoring is not a straightforward cost savings tactic. Many organizations experience ‘offshore fatigue'». The advice from Deloitte director Chris Gentle was to think long term and not to «dabble». He said: «Financial institutions that make a half-hearted attempt at offshoring are exposed to all of the risk, while enjoying only some of the benefits. The message is clear: «Stay home if you’re not committed».



Read the article again and choose True or False

Match the following synonyms from the article



Fill in the gaps with some of the words below

Read the situation


You are a director of a financial company. At the moment, you are trying to cut expenses on bookkeepers. You are considering the outsourcing in your company. That is why you recently contacted an outsourcing company Book-it requesting what they offer.
Below is a part of the letter that you received from Mr. Dowson, a Marketing Manager.

Write a letter to Mr. Dawson

In your letter:

  1. Use appropriate salutation.
  2. Ask for product demonstration and outsourced staff discussion at your workplace.
  3. Explain why you are interested in one of the additional products.
  4. Suggest the possible date for a meeting.
  5. Use appropriate closing remarks.

Write 60–80 words. Do not include any postal addresses.


Instructions

  1. Read the situation and instructions carefully.
  2. Plan what you are going to write about.
  3. Write the text according to your plan.
  4. Check your writing before sending it for evaluation.
  5. Learn the rules and see the sample 🔗here.
  6. Please use 🔗Grammarly to avoid spelling and some grammar mistakes.

  • bookkeeping
  • opportunity
  • demonstration
  • software


  • Dear (name),
  • Thank you for …
  • We are interested in …
  • We would also like to …
  • Will this be OK for you?
  • Yours sincerely,
  • Yours faithfully,



Sample answer

Dear Mr. Dawson,

Thank you for your letter.
We are very interested in a demonstration at our workplace of your new bookkeeping software Accounting Magic because we are trying to reduce the number of bookkeepers in our company to a minimum of just a head accountant. We would also like to discuss the opportunity of outsourced accountants on July 1st.
Will this be good for you?
We are looking forward to receiving an answer.

Yours sincerely,

(name)

Урок Homework Курс
  • What's outsourcing?
  • Exam tip Reading Part 5
  • Reading Part 5 drilling
  • Do you outsource?
  • Exam tip Listening Part 4
  • Outsourcing discussion
  • Speaking
  • Deloitte company
  • More words to learn
  • Book-it outsourcing