Business outsourcing has received much popularity in recent years in most of the developed countries. The primary objective behind the outsourcing is lowering the cost level of the business. Since production is one of the most important parts of any business, it is important to reduce the production cost in order to increase the profit level of the business. Since in most of the developed countries the cost of labour is high & labour plays an important role in the production of goods & services. The high labour cost increases the overall cost of production. The same work can be done by labourers of developing countries. Therefore most of the companies are taking advantage of this & supply the work to developing countries to reduce the level of cost (Handley et al., 2009). The business outsourcing is depends on the business size & the resource structure of the business. The organisation has to decide the level of outsourcing on the basis of the resource structure & the size of the business. The use of the business outsourcing is of highest level in the service sector & most of the businesses related to the information technology. The outsourcing is differentiated into different parts like the front office & the back office outsourcing. In the following study various advantages & disadvantages of the outsourcing has been described.
There are different objectives associated with the present research & these give a proper direction to conduct the research in a proper manner. These objectives are as follows:
Since the outsourcing is increasing at a rapidly in different business sectors & these are affecting the business performance in a positive manner. It is important to be acknowledged with various aspects of the business outsourcing (Halvey & Melby, 2007). There are different merits as well as demerits which affect the business significantly. It is important to identify all these factors & recognise whether the outsourcing technique would be suitable for the business or not. This present research will give scope to have proper understanding over the issue that whether the outsourcing should be adopted by any business or not.
In most of the businesses the use of the business outsourcing has increased due to its crucial role in reducing the cost of production in case of business products & services. In the past the use of business outsourcing was only limited within the service sector, but now the application of this technique has spread to other businesses as well. The outsourcing is of different categories & these depend on the business structure. It is important for every business establishments the benefit it is acquiring through this process. In most of the developed countries the employees cost is very high & this escalates the cost of the production of the business (Wüllenweber et al., 2008). If the same work can be done at the lower cost, it will increase the profit level of the company. This is possible if the same work is supplies to different developing countries. Since due to large level of unemployment the wage level is low & this facilitates most of the business organisation to provide products & services at much lower cost. The outsourcing can also be differentiated into different categories & these are as follows:
These kinds of outsourcing services generally deal with customers. Customers play an important role in the business performance of every organisation & as a result it is important to communicate with customers continuously. This can be done with the help of the email, telecommunication or fax. Therefore the front office outsourcing comprises of customer support, technical support, the market research & telemarketing.
On the other hand the back office outsourcing deals with different business functions of an organisation & these are management of data, the data entry service & processing of payment (Bryman, 2006). All these services are necessary to run a business in a smooth manner.
Beside these categorisations the outsourcing can also be differentiated on the basis of the geographic location. If the outsourcing is done outside the country it is also known as the offshore outsourcing & if the same is done within the country it is known as the onshore outsourcing.
Though the business outsourcing is advantageous for most of the business enterprises, it has also various disadvantages. These have been described below:
One of the most important advantages of the business outsourcing is the cost saving which is the main objective behind the outsourcing. Since the cost of labour is high in few developed countries & it is less in most of the developing countries, this is advantageous for the organisation from two different sides. One, it lowers the cost of production of the products & services & at the same time the same capital can be utilised in other business functions. This will facilitate the organisation in reducing numbers of machineries & at the same time in saving office space.
One of the most important factors in the business operation is the competitive advantages & this can be achieved by an organisaition if it is able to specialise in any particular product or service. This helps in increasing the market share of the company. If any organisaition wants to specialise in the core business activity, it has to outsource other secondary services so that the organisation can concentrate on the core business.
It is the responsibility of the company to take care of needs & requirements of customers. This helps in fulfilling the satisfaction level of customers. This is possible in two ways. It is essential for the organisation to recruit skilled & efficient employees to handle customer care services. By outsourcing activity the organisation will be able to provide customer service with the help of some trained employees (Halvey & Melby, 2007). Since outsourcing facilitates the organisation to focus on the core activity, as a result it will help in improving the quality level of products & services. This will help in improving the customer satisfaction level.
Outsourcing gives the opportunity to an organisation to concentrate on the primary activity of the organisation & at the same time in engaging with other businesses. This increases the efficiency level of the business. With the help of the modern technology the internal business system can be improved. The outsourcing process helps businesses to learn new technology & as a result it will improve the productivity of the organisation.
The outsourcing process gives the opportunity to the business to make contract with the large numbers of vendors. This gives the business select the vendor according to the business requirement (Sako, 2006). The experiences of the vendor, the knowledge & at the same time skill of employees are key factors behind the selection of a vendor.
One of the most important barriers of the outsourcing is the language barrier. Since in case of the outsourcing different services are supplied to other countries, therefore language acts as a hindrance in proper communication with customers & also with employees. Communication barrier acts as a factor that leads to the failure of the business in the long run.
To work with an organisation it is imperative to have proper knowledge about the business activity & at the same time about the background of the business (Teece, 2010). Large numbers of employees engage with these types of activities without having proper knowledge of the business. This hampers the business activity significantly.
The outsourcing service also consists of other disadvantages & these are as follows:
What are the advantages & disadvantages associated with the business outsourcing?
Secondary Questions
The most important methods in order to conduct a research are the qualitative method & the quantitative method. In the present research both the qualitative as well as quantitative methods have been used.
The quantitative research is based on the numerical data. In order to conduct the quantitative research different aspects have to be taken into consideration.
In order to conduct a research there are different philosophies are followed such as the positivism & the interpretivism. Since in the present research the help of both the qualitative & quantitative research method have been taken into account therefore both the philosophies have been followed by the researcher (Ghodeswar & Vaidyanathan, 2008). The positivism research is based on the scientific data & on the other hand the interpretivism philosophy is based on the established theory.
There are different approaches available to conduct a research & these are the inductive approach & the deductive approach. In the present research the deductive approach has been followed (Dörnyei, 2007). In this approach information are collected at the first instance & then on the basis of the information the conclusion is drawn.
In the present research the help of the sampling method has been used since it is not possible to conduct the population survey with in such a short period of time & limited resources. At the beginning a sample has been selected & the sample size is 50. This sample has been chosen randomly to avoid any kind of bias (Silverman, 2016). To conduct the quantitative research the help of the questionnaire method has been taken into account. This questionnaire will consist of few relevant questions to help the researcher to reach to a conclusion.
Another research method which is applied to accomplish the research is the qualitative research. In this method the researchers has selected two outsourcing companies & was decided to take the interview of six managers. At the end only three managers were available for interview since rest of the managers were busy with their meeting (Dörnyei, 2007). Few specific questions were set to ask these managers regarding the outsourcing to make an overall understanding of the research topic & its practical scenario.
The researcher has faced different limitations during the whole process of research & these are as follows:
Conclusion
From the above research it can be concluded that the role of outsourcing is immense in a business organisation. The main objective of the outsourcing is the reduction of the overall cost if the production. It also helps in increasing the business efficiency & assisting the organisaition to focus on the core business process. It is not free of any disadvantages. Various disadvantages associated with the outsourcing are language barrier & the lack of knowledge of the business activities of employees working within the organisation. though there are large numbers of disadvantages the advantages surpass the disadvantages attached with the outsourcing & this process is widely used by different business organisations to increase their productivity level.
References
Handley, S. M., & Benton, W. C. (2009). Unlocking the business outsourcing process model. Journal of operations management, 27(5), 344-361.
Halvey, J. K., & Melby, B. M. (2007). Business process outsourcing: Process, strategies, and contracts. John Wiley & Sons.
Yang, D. H., Kim, S., Nam, C., & Min, J. W. (2007). Developing a decision model for business process outsourcing. Computers & Operations Research, 34(12), 3769-3778.
Click, R. L., & Duening, T. N. (2004). Business process outsourcing: the competitive advantage. John Wiley & Sons.
Wüllenweber, K., Beimborn, D., Weitzel, T., & König, W. (2008). The impact of process standardization on business process outsourcing success. Information Systems Frontiers, 10(2), 211-224.
Bryman, A. (2006). Integrating quantitative and qualitative research: how is it done?. Qualitative research, 6(1), 97-113.
Dörnyei, Z. (2007). Research methods in applied linguistics: Quantitative, qualitative, and mixed methodologies. Oxford University Press.
Silverman, D. (Ed.). (2016). Qualitative research. Sage.
Ghodeswar, B., & Vaidyanathan, J. (2008). Business process outsourcing: an approach to gain access to world-class capabilities. Business process management journal, 14(1), 23-38.
Sako, M. (2006). Outsourcing and offshoring: implications for productivity of business services. Oxford Review of Economic Policy, 22(4), 499-512.
Teece, D. J. (2010). Business models, business strategy and innovation. Long range planning, 43(2), 172-194.
Dörnyei, Z. (2007). Research methods in applied linguistics: Quantitative, qualitative, and mixed methodologies. Oxford University Press.
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