Benefits And Limitations Of Outsourcing Business Functions

Objective

Discuss about the Benefits and the limitations involved in outsourcing business functions.

Outsourcing can be defined as the process of devolving certain job functions in an organization to be conducted outside the company instead of having the organization handle them internally. The expanding predominance of outsourcing in modern times has led to it being considered a core organizations operation; some of the functions that have been increasingly outsourced are human resource, procurement, and information technology (McIvor, 2005.p89). These functions among others can either be outsourced to companies or individuals considering the intensity of the operation. In most organizations nowadays outsourcing is considered a primary aspect of the success of the human resource department hence outsourcing is considered as a method to reduce the overhead costs of business processes. However, outsourcing holds advantages and disadvantages, which mean an organizations decision to outsource some of its operations, must be candid and rationale in order to avoid future loss. This paper will focus on the advantages and difficulties of outsourcing as a major function of business and major firms (Taplin, 2012.p4).

The reason why this research is being conducted is to ascertain the benefits and the limitations involved in outsourcing business functions.

This paper is prepared to focus on the advantages and disadvantages of outsourcing business functions. In doing so the research will consider a number of various operations that a business can outsource and focus on the pros and cons of the functions.

The paper is structured in nine sections. The first section is the introduction that entails the definition of outsourcing. The second section provides the summary of the paper structure. Section three includes the literature review. Section four entails the hypothesis of the research as well as the main objective of conducting the research, the fifth section comprises of the design and methodology used to conduct the research. Section six characterizes of the research limitations. Section seven contains the time schedule used to conduct the research.

Definition and types of outsourcing

Outsourcing is the act of transferring business operations and obligations to other organizations or individuals. We are living in a globalized world that makes it hard not to outsource. According to the Outsourcing Institute, more than 30% of the organizations outsource their services. Whether startups or existing business, any organization should determine and evaluate if outsourcing is right for their survival. (Bragg, 2006.p90) In order to stay competitive in today’s marketplace business need outsourcing, many organizations nowadays have recognized the potential benefits that outsourcing holds. The benefits include:

Scope of Work

Organizations ability to focus on in-house operations – when organizations outsource they save time that will help them focus and draw their attention to matters at hand that involve intense internal tasks (Rivard, 2016.p7).

Access technology- organizations that outsource enjoy automation of certain operations hence rendering them competitive and innovative in various aspects (Czinkota and Ronkainen, 2011.p8-9).

Enhancing flexibility- any organization needs to be flexible in carrying out its operations, by delegating some of its operations to a third party the firm is able to turn to other functions and discover various capabilities (Taplin, 2012.p8).

Organizations perform this kind of operations faster and at a cheaper cost that the organization outsourcing the function in question. Outsourcing is a major aspect of every organization it is therefore divided into two parts ‘internal outsourcing and external outsource’, this depends on the level of control over the performance of the outsourced function. In addition, outsourcing includes various activities (Greaver, 2014.p80). This may be as a result of an organization lacking adequate resources and financial muscles to complete the tasks that are therefore outsourced to organizations that have resources hence performing the operations faster and at lower costs. Outsourcing has different approaches. The first approach is the resource-based approach. The second approach is the transaction cost approach which involves planning costs and monitoring operations costs that affects outsourcing as an operation itself (Sparrow, 2005.p5).

Outsourcing and Technology

Outsourcing seems to work efficiently hand in hand with technology. Recently many firms have adopted technological advancements in order to run their operations in due time. When an organization outsources their functions they are able to manage their projects easily using technology. This is because organizations provide the firms that have outsourced their tasks with technology platforms that can be used to monitor all the operations to the latter, most of them are automated hence saving time and personnel optimization (Gervais and Barrar, 2006.p6). Outsourcing falls under the operational strategy of an organization. It can, therefore, be used to complement other organizations strategic activities that will see it to success. Outsourcing will need to be implemented by the management along with the usual strategies that will be drafted by the organization to succeed. Most of the organizations today must adopt the need to outsource in order to continue with the trend of globalization regardless of the competition in the marketplace outsourcing are a crucial operation. For instance outsourcing today in logistics firms has become one of the optimal ways to solve logistics issues which involve delivery of goods and services as well as coordination of procurement and supply of goods (Folinas, 2013.p9-10). First and foremost outsourcing has immense advantages, an organization that has outsources its operations might see itself reducing operations cost, improve performance enhance flexibility and save time. Organizations that outsource its operation, in addition, can access highly qualified and trained personnel who might perform the tasks the organization is unable to perform efficiently and competently. According to the major advantages of outsourcing that is often overlooked is the concentration of a certain task that a certain organization has outsourced hence providing end results that are reliable and professional, compared to internal operation s the outsources operation might not be given higher concentration since the organization does not have enough personnel or qualified employees to complete the tasks (Tompkins, 2005.p7). Technology has the capability of providing the organization with an opportunity to access creativity and innovations hence providing it with relevant ideas that can develop the organization immensely.

Literature Review

Disadvantages of outsourcing; However outsourcing poses a number of risks in an organization, as discussed earlier outsourcing involves dependability of another organization to perform various functions, therefore, this creates some sort of enhanced reliability from the supplier, this may result to employee redundancy hence slowing the organization’s entire functions. The major underlying disadvantage emanating from outsourcing is the loss of competitive advantage. The organizations that outsource certain services might be rendered vulnerable to their ideas that have been built for years being lost (Saxena and Bharadwaj, 2007.p8). Other disadvantages of outsourcing include organization loss of control; this is because the organization will be unable to monitor the operations. Irrespective of the trust the organizations give to those they have assigned certain duties there might be hitches in the implementation of the organization’s goals emanating from not monitoring the outsourced tasks.

Finally, qualities of service that an organization has been known for might reduce over time due to outsourcing. According to outsourcing can diminish the quality of service hence producing undesired results for the consumers, this is a major risk that might lead to the organization fading away (Solli-Sæther and Gottschalk, 2010.p89).

The objective of this research is to study the advantages and disadvantages of outsourcing business operations. As discussed in the literature review 

This research used a systematic method that involves both qualitative and quantities methods. I used surveys on different organizations to determine the advantages and disadvantages of outsourcing. First, I conducted surveys on several organizations in Australia that outsource their services and found out the benefits they enjoy from outsourcing as well as the challenge they face from outsourcing. Secondly, a qualities resort aimed at observing and analyzing organizations and individuals which are delegated certain tasks to determine the costs shared and risks incurred.

The time schedule of the research process was three days. Two days were allocated to visit organizations to conduct surveys and run interviews with the managers of these organizations. I utilized the third day to analyze and evaluate the research findings.

Limitations on research methodology

Most of the interviews I conducted were not accustomed to the managers I involved. As a result, most of the managers and leaders’ in organizations provided vague and uncertain information on such aspects such as costs involved in outsourcing and what operations they outsource. In addition, when conducting surveys in various firms some of the receptionists were hostile; they refused to provide information concerning their firm’s internal or external operations. The extending power of outsourcing in current circumstances has prompted it being viewed as a center association’s task; a portion of the capacities that have been progressively outsourced are human asset, acquirement, and data technology. These capacities among others can either be outsourced to organizations or people thinking about the power of the task. In many associations these days outsourcing is viewed as an essential part of the accomplishment of the human asset division consequently outsourcing is considered as a technique to decrease the overhead expenses of business forms. Nonetheless, outsourcing holds preferences and burdens, which mean an association’s choice to outsource a portion of its tasks, must be real to life and reason keeping in mind the end goal to evade future misfortune. This paper will center on the favorable circumstances and troubles of outsourcing as a noteworthy capacity of business and major firms.

Definition and types of outsourcing

Objective

The motivation behind why this exploration is being directed is to find out the advantages and the restrictions engaged with outsourcing business capacities. This paper is set up to center around the favorable circumstances and inconveniences of outsourcing business capacities. In doing as such the examination will consider various different activities that a business can outsource and center on the upsides and downsides of the capacities. The principal area is the presentation that involves the meaning of outsourcing. The second area gives the synopsis of the paper structure. Segment three incorporates the writing audit. Area four involves the speculation of the examination and also the fundamental goal of leading the exploration, the fifth segment includes the plan and procedure used to direct the examination. Area six describes the exploration impediments. Segment seven contains the time plan used to direct the exploration. Outsourcing is the demonstration of exchanging business tasks and commitments to different associations or people. We are living in a globalized world that makes it hard not to outsource. As per the Outsourcing Institute, over 30% of the associations outsource their administrations. Regardless of whether new companies or existing business, any association ought to decide and assess if outsourcing is ideal for their survival. (Bragg, 2006) keeping in mind the end goal to remain focused in the present commercial center business requires outsourcing, numerous associations these days have perceived the potential advantages that outsourcing holds. Associations play out this sort of tasks speedier and at a less expensive cost than the association outsourcing the capacity being referred to. Outsourcing is a noteworthy part of each association it is hence separated into two sections ‘inside outsourcing and outside outsourcing’; this relies upon the level of control over the execution of the outsourced work. Also, outsourcing incorporates different activities. This might be because of an association lacking sufficient assets and money related muscles to finish the errands that are in this manner outsourced to associations that have assets henceforth playing out the tasks quicker and at bringing down expenses. Outsourcing has diverse methodologies. The principal approach is the asset-based approach h. the second approach is the exchange cost approach which includes arranging expenses and checking activities costs that influences outsourcing as a task itself.

Conclusion

Taking everything into account, outsourcing falls under the operating system of an association. It can, in this manner, be utilized to supplement different associations’ key exercises that will see it to progress. Outsourcing should be executed by the administration alongside the typical procedures that will be drafted by the association to succeed. The vast majority of the associations today should embrace the need to outsource so as to proceed with the pattern of globalization paying little mind to the opposition in the commercial center outsourcing is a significant task. For example outsourcing, today in coordination firms has turned out to be one of the ideal approaches to illuminate coordination issues which include the conveyance of products and enterprises and in addition coordination of obtainment and supply of goods. First and premier outsourcing has enormous preferences, an association that has outsourced its activities may see itself decreasing tasks cost, enhance execution upgrade adaptability and spare time. Outsourcing appears to work proficiently as one with innovation. As of late numerous organizations have embraced innovative headways keeping in mind the end goal to run their activities in due time. At the point when an association outsources their capacities, they can deal with their tasks effortlessly utilizing innovation. This is on the grounds that associations give the organizations that have outsourced their assignments with innovation stages that can be utilized to screen every one of the tasks to the last mentioned, the greater part of them are computerized subsequently sparing time and workforce optimization. Associations that outsource its activity, what’s more, can get to exceedingly qualified and prepared workforce who may play out the assignments the association can’t perform productively and ably.

References

Bragg, S. (2006). Outsourcing. Hoboken: John Wiley & Sons, Inc.pp.89-93

Czinkota, M. and Ronkainen, I. (2011). The Future of Global Business. Hoboken: Taylor & Francis.pp1-45

Folinas, D. (2013). Outsourcing management for supply chain operations and logistics services. Hershey, PA: Business Science Reference.

Gervais, R. and Barrar, P. (2006). Global Outsourcing Strategies: An International Reference on Effective Outsourcing Relationships. 1st ed. England: Grower Publishing Company.pp4-89.

Greaver, M. (2014). Strategic outsourcing. New York: AMACOM.pp.34-104

McIvor, R. (2005). The outsourcing process. 1st ed. Cambridge: Cambridge University Press.pp45-256

Ramanthan, T. (2008). The role of organisational change management in offshore outsourcing of information technology services. Northumbria University.

Rivard, S. (2016). Information technology outsourcing. [Place of publication not identified]: Routledge.pp.4-8

Seshadri, S. (2005). Sourcing strategy. New York, N.Y.: Springer.

Solli-Sæther, H. and Gottschalk, P. (2010). Managing IT outsourcing performance. Hershey, Pa. [u.a.]: Business Science Reference.

Sparrow, E. (2015). A guide to global sourcing. Swindon: British Computer Society.pp.4-9

Taplin, R. (2012). Outsourcing and human resource management. London: Routledge.pp.1-8

Tompkins, J. (2005). Logistics and manufacturing outsourcing. Raleigh, N.C.: Tompkins Press.Czinkota, M. and Ronkainen, I. (2011). The Future of Global Business. Hoboken: Taylor & Francis.