Answer :
The hiring of an overseas firm to handle payroll, data processing, and accounting functions by a U.S. company that produces drivetrain components for automotive manufacturers is an example of outsourcing.
Outsourcing is the practice of delegating specific tasks or functions to external companies or service providers. It is commonly done to take advantage of specialized expertise, cost savings, increased efficiency, or other benefits offered by the outsourcing partner.
In this case, the U.S. company has chosen to outsource certain back-office functions to an overseas firm. By doing so, they can benefit from various advantages. Firstly, outsourcing allows the company to focus on its core competencies, such as designing and manufacturing drivetrain components, while leaving the payroll, data processing, and accounting tasks to a specialized service provider. This can result in improved efficiency and quality in these areas.
Secondly, outsourcing can offer cost savings. The overseas firm may have lower labor costs, allowing the U.S. company to reduce expenses associated with payroll and administrative functions. Additionally, outsourcing eliminates the need for the U.S. company to invest in infrastructure, software, and personnel for these specific tasks.
Overall, outsourcing provides the U.S. company with the opportunity to streamline operations, access specialized expertise, and potentially reduce costs by leveraging the capabilities of an overseas firm.
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