Concept Of Business Communication Outsourcing: Benefits, Limitations, And Strategies

Discussing on the concept of Outsourcing

Discuss about the Concept of Business Communication Outsourcing.

This study is based on the particular case study of an accounting firm, where the employees have some confusion and disagreements regarding the usefulness of outsourcing. In order to solve the disagreements among the employees, this study is going to discuss on the concept of outsourcing. At the same time, in order analyze the usefulness of outsourcing critically in present business context, the study also focuses on the benefits and limitations of outsourcing. At last, the study suggests some communication strategies that the accounting firm can adopt to implement the outsourcing.

McIvor (2016) has defined outsourcing as a way or technique that the business organizations adopt in order to operate the business activities through the third-party intervention. In current scenario, the business world is much complex. In this complex business world, it is very problematic for the managements of the companies focusing on the improvements of their core competencies. Gerbl et al. (2016) mentioned that presently, the business organizations are getting attracted towards outsourcing so that they can outsource the less critical business activities and can concentrate on the improvements of their core competencies. Therefore, in the other words, it can be said that outsourcing is the way of achieving the business expertise, improve service quality and reducing cost level by sharing the functions of the business with the third party through advanced technology.

In the words of Mandal (2016), outsourcing is a business practice that helps the companies controlling their costs level by transferring few portions of their business activities to the outsiders rather than performing the business activities internally. According to Mann and Graham (2016), outsourcing is the cost-saving strategy that effectively improves the performance quality of the business. At current business scenario, many service providing companies especially the financial or accounting service proving companies are using the outsourcing technique to improve their service quality (Khan and Fitzgerald 2016). The percentage of the finance and accounting companies using the business outsource techniques is increasing.

In the above discussion, it has been identified that the use of outsourcing strategies is increasing at current business scenario. Cui (2016) has suggested that the use of outsourcing is increasing because of the benefits that the business organizations get from outsourcing. In case of this particular accounting firm, the management of the company may gain the following benefits by implementing the outsourcing technique:

Identifying the benefits of outsourcing

Benefit of wage arbitrage – Outsourcing can provide the wage arbitrage benefit to the companies. The wage arbitrage helps the companies reducing the level of overall costs (Liu, Wang and Huang 2017). For example, MphasiS Corporation, India has gained the wage arbitrage benefit by outsourcing their service to different locations in India, Australia and China.

Benefit of tax-saving – The outsourcing helps the companies gain the tax saving facility. The companies may get tax holiday facility or tax exemptions by applying the outsourcing business technique (Cpaaustralia.com.au 2017).

Benefits of expertise labor – The companies get the expertise labor through business outsourcing. For example, PwC, one of the largest audit firms, outsources its business in different countries in the world and recruit the skilled and knowledgeable personnel. The skilled and knowledgeable personnel help the company improving its service quality (Caratti, Perrin and Scully 2016).

Benefit of focusing on the core activities – The companies can easily focus on their core business activities through outsourcing (Höglund and Sundvik 2016). In case of outsourcing, the companies transfer some portion of the business activities to the third party and this provides the scope of focusing on the core activities of the business. This ultimately helps improving the quality of the service (Kotlarsky, Oshri and Willcocks 2016). For example, the ‘big 4’ audit firms in the international market that are – PwC, Deloitte, Ernst and Young and KPMG have improved and maintained the quality of their core services through outsourcing.

Therefore, from the above discussion, it can be said that the accounting firm can get several benefits through business outsourcing. The main factor is that the service quality of the firm will be improved, which will bring more customer satisfaction (Dhyne and Duprez 2016). If the company becomes able satisfying its customers in a better way, then it can be expected that the revenue of the company will increase. Apart from the above-mentioned benefits, the accounting firm can get many other benefits like, solving the problem of skilled labor shortage, access to the new markets and increasing speed to the existing market.

The discussion in the above has indicated the benefits of business outsourcing. However, Höglund and Sundvik (2016) has stated about some of the limitations of business outsourcing. The major limitations of busies s outsourcing are as follows:

Lack of customers’ acceptance – Sometimes, the products and services of the companies are not properly accepted by the customers in different places, where the companies have outsourced their businesses. Due to the differences in language and culture, this particular problem or limitation takes place (Liu, Wang and Huang 2017).

Identifying the limitation of outsourcing

Political instability – Another limitation of outsourcing is political instability in the areas or places, where the business is outsourced. If the political instability takes place, then the activities of the business, which are outsourced, get affected (Kotlarsky, Oshri and Willcocks 2016). It ultimately affects the overall performance of the business.

Issue of government control – There are many areas, where the control of the government is much high. In this case, strict government’s control, it becomes very difficult for the companies outsourcing their business activities. Excessive rules and regulations of the government increase the business complexities (Dhyne and Duprez 2016).

Lacks of support from employees – Sometimes problems take place due to the misunderstandings between the employees of the company at the primary location and at the outsourced location. This problem also takes place due to the cultural differences (Khan and Fitzgerald 2016).

In the above discussion, it has been identified that there are many advantages or benefits and limitations of business outsourcing. However, in order to implement the outsourcing strategy, the management of this particular accounting firm requires communicating the employees about the importance of outsourcing at current scenario (Mann and Graham 2016). The management of the company can communicate this by taking proper strategies of communication. The accounting firm can implement the following communication strategies:

• The management must communicate with the employees face to face verbally. Verbal communication will be suitable because this will help the employees express their views clearly in front of the management.
• Before stating about the business outsourcing or the benefits of business outsourcing, the management of the company requires describing the current business situation of the company to the employees. At the same time, the management also needs to clearly state how the business outsourcing can help this company improving its current service quality.
• The management can arrange for the meeting for discussing about the importance of outsourcing for this particular company. At the same time, the company can also ask the employees about their views regarding the business outsourcing after conveying the benefits of the same.
• The management of the company also requires arranging for a training session in order to train the employees regarding the business outsourcing. This will help the employees understanding how the process of business outsourcing works in business organization.

Therefore, from the above discussion, it can be said that in order to communicate the employees about the business outsourcing at the accounting firm, the management of the company requires conducting verbal face-to-face communication. This must be done by arranging a meeting, where the employees will not only know the benefits and limitations of business outsourcing but they will also provide their ideas and views regarding business outsourcing.

Conclusion

In this study, it has been identified that business outsourcing is very popular at the current business scenario. Business outsourcing is a process in which the companies transfer some portions of their business activities to the third party, so that they can concentrate on the core business activities. The study has also identified that many large business organizations especially the service providing companies have implemented the business outsourcing strategy. The study has indicated several benefits of using business outsourcing strategy. Some of the benefits are – tax-saving benefit, wage arbitrage benefit, improving the efficiency level of the company and focusing on the core business activities. However, there are also some limitations of business outsourcing that the study has identified and these limitations are – lack of customers’ acceptance, lack of employees’ co-operation, political instability and high governmental control in the areas where business is outsourced.

The study has also suggested the verbal communication strategy for the accounting firm for communicating the employees about the business process outsourcing. The study has suggested the verbal communication because through verbal communication the management of the company can explain the need of business outsourcing to the employees in a better way. Apart from that, the employees can also express their ideas regarding the same matter.

Reference list:

Caratti, S., Perrin, B. and Scully, G., 2016, February. An Accounting Firm Perspective of Offshoring. In International Workshop on Global Sourcing of Information Technology and Business Processes (pp. 137-165). Springer International Publishing.

Cpaaustralia.com.au. 2017. CPA Australia. [online] Available at: https://www.cpaaustralia.com.au [Accessed 17 Jan. 2017].

Cui, Z., 2016. The Impact of Switching Costs on the Outsourcing of Knowledge?Intensive Business Processes. Decision Sciences.

Dhyne, E. and Duprez, C., 2016. Local or global outsourcing and firm’s performance: Empirical evidence from the Belgian production network.

Gerbl, M., Gerbl, M., McIvor, R., McIvor, R., Humphreys, P. and Humphreys, P., 2016. Making the business process outsourcing decision: why distance matters. International Journal of Operations & Production Management, 36(9), pp.1037-1064.

Höglund, H. and Sundvik, D., 2016. Financial reporting quality and outsourcing of accounting tasks: Evidence from small private firms. Advances in Accounting, 35, pp.125-134.

Khan, N. and Fitzgerald, G., 2016. Offshore Outsourcing Business Models: An Analysis of Four Cases. Global Sourcing of Services: Strategies, Issues and Challenges, p.375.

Kotlarsky, J., Oshri, I. and Willcocks, L.P. eds., 2016. Shared Services and Outsourcing: A Contemporary Outlook: 10th Global Sourcing Workshop 2016, Val d’Isère, France, February 16-19, 2016, Revised Selected Papers (Vol. 266). Springer.

Liu, S., Wang, L. and Huang, W., 2017. Effects of process and outcome controls on business process outsourcing performance: Moderating roles of vendor and client capability risks. European Journal of Operational Research.

Mandal, P.K., 2016. Make in India and Recent Trend of FDI Inflow.

Mann, L. and Graham, M., 2016. The Domestic Turn: Business Process Outsourcing and the Growing Automation of Kenyan Organisations. The Journal of Development Studies, 52(4), pp.530-548.

McIvor, R., 2016. An analysis of the application of process improvement techniques in business process outsourcing. International Journal of Quality & Reliability Management, 33(3), pp.321-343.