Write a literature review on the Business Outsourcing.
Business outsourcing is a process of doing business where the functions to operate business and responsibilities is given to the third person or party. It becomes the subset to the organizations, as it is a type of back office. It includes internal functions like human resource development, accounting and finance tasks (Chou, Techatassanasoontorn, and Hung 2015). It also involves customer services as call centre services facilities. The functions of outsourcing business processes are normally information technology oriented.
There are various types of outsourcing that takes place and they are under back office functions it includes human resource development and recruitment process, accounting department , web and mobile department and design, graphics development sector(Cui, Z., 2017.). On the other side, front office functions on virtual assistants, technical help, interaction and customer service support and the telemarketing department.
The main objective is to create good quality production with less cost. It always tries to save the cost by creating more business opportunities globally (Doan, M.A. and McKie 2017). Most organization used offshore business as a tool to compete with their rivals. Therefore, this creates a tough competition in the global markets as well as it creates more efficiency at the work place, thus creates more customer satisfaction
Australia creating great encouragement for the outsourcing business functions in terms of small companies (Eggert et al. 2017). In the past few years, there is a huge shift of the businesses into outsourcing functions. With the rise in the demand for this business process, there is strong positive impact on the economy as per the industrial analysis report. There is more demand in technical sector like information technology, human resource department, and more number of recruitment takes place. The line of production expanded in case of non-technical sector like article writing, legal issue and translation services (Fountain 2016). The aim of the business organization is to create efficiency with standard quality products and to maintain stability. Australia emphasis more on cultural factors and trust related issues.
Various advantages and disadvantages of outsourcing business functions that occurs in the organization discussed below. Outsourcing creates more productivity and efficiency at work place.
Advantages
Focus on work- The focus should be on the activities that are under back office services. It includes human resources and financial resources that create growth of the company. By outsourcing business functions in these services, it can create expansion of business by using consumer resources efficiently without putting any effort to sacrifice the product quality (Gerbl et al. 2016). An organization with greater agreements or orders will significantly boost the productivity and purchasing capacity in a short period known as outsourcing purchase of goods.
Cost and efficiency- Business outsourcing is a good step in case of back office services. The size and scale of business creates good production and efficiency in the production leads to profit saving.
Reduction in overhead- Overhead includes cost of functioning of the desired work that is extremely high. Using outsourcing can make easy in the functioning of the particular service.
Control on operational activities- When there is huge cost that is beyond the line of control then there must be outsourcing business practice (Hernandez and Ona 2016). Various departments evolved with time form poorly managed system with the help of outsourcing. Outsourcing creates strong management skills and good controlling power.
Flexibility of staffs and employees- Outsourcing creates flexibility of employees during seasonal business fluctuations. It means that during seasonal periods of production, there are cyclical demands for additional resources; therefore, outsourcing helps to generate additional resources as per the requirements.
Continuation and risk factor- High staff turnover will create uncertainty and there will inconsistency at work place (Kim et al. 2014). To solve this problem outsourcing helps to provide a level in continuity and reduce the risk of uncertainty at a standard level.
Development of staff in internal environment- Sometimes it happens in an organization when there are few services that are not possible for the staffs and employees to complete or perform well in relation to onsite job(Lahiri 2016). Outsourcing in terms of on site will help the employees or the staff in providing the adequate requirement and skills for the desired service.
While performing outsourcing business functions, it give benefits of lower labor costs , increase in productivity and output, facility of highly educated skilled business specialists(Lacity and Willcocks 2017). It also provides benefit of freedom of concentrating in relation to core business matters.
Disadvantages
There are few disadvantages while performing outsourcing business functions. They can be as while outsourcing offshore, improper management can take place within the organization (Liu, Wang and Huang 2017). There might be problems in managing the entire system. Apart from this, there are few other points of disadvantages that an outsourcing holds.
Risk of losing confidential information- use of outsourcing creates the risk of losing important personal information and secrets of the organization while dealing with the third party (Mann and Graham 2016). It can be in cases like outsourcing of roles like payroll, human resource or else recruitment services.
Delivery synchronization- problems like poor quality resources and materials, delays in providing services, renewal of contracts, improper communication and misunderstandings can be solve internally without the help of outsourcing(McIvor 2016).
Hidden price- As outsourcing is cost benefit, therefore there are sometimes when prices hidden. Prices not known therefore, due to this there is also problem in the working of the given task and output (Sople 2016).
Inconsistency of customer focus- Outsourcing is there for many organizations therefore the company is not able to get 100 percent attention from an outsourcer due to the catering on the needs of many other companies simultaneously.
With these disadvantages, the organization must go through the merits and demerits about the business process outsourcing in order to avoid issues later. The organization should go for complete research or while applying for outsourcing business functions.
The aim of the research is to provide a literature review on a company of Australia that indulges in outsourcing business functions. It includes a detailed research study done previously and the viewpoint on the outsourcing business functions of an Australian company. As per the recent findings, Outsourcing has become an important tool for many business industries across the globe. Their aim is to maximum profit and more efficiency excluding the burden on expenditure. IBM Australia published their first Australian business process outsourcing in 2012. It includes current market and economic state of outsourcing business (Willcocks et al. 2017). Expansion of business globally is because of the key factor outsourcing; thereby 70 percent of industries surveyed in terms of benefit from outsourcing. Global market in Australia is more competitive and volatile in nature therefore it is necessary to lower the operating cost for goods and services in order to create strong competition.
Australia expects a growth of 20 percent in the coming years. According to the director of IBM, there was a rapid change in the growth rate of BPO industry due to constant improvement in technology and efficiency.teh industrial report gave information that human resource developments hold for major percentage of outsourcing. Australia senior business head keeps a check on benefits of outsourcing and improvement in customers’ satisfaction, flexibility, market fluctuations, expansion in terms of business and productivity, and the opportunities and advantages in terms of global competition. Further, there is a target of 23 percent growth in human resource sector in the coming years. In terms of marketing, outsourcing involves customer management relation (Veit et al. 2017).
There is a 21 percent growth within the organization, out of which the online market includes 17 percent rate of growth. It helps to solve complex issues of the customers. Other sectors in outsourcing business practices, like cloud computing that is expanding rapidly. Nearly 35 percent industries are in outsourcing business, and 15 percent includes marginal rise of industries that have adopted cloud business in outsourcing. Using remote mechanisms and mobility it created huge growth in the outsourcing business functions. There are various sectors under this outsourcing business functions like legal process outsourcing, knowledge process outsourcing.
Martin Conboy, the president of Australian business association gave a remark that due to increase in the pressure in outsourcing business practices, there is too much pressure on the company’s shareholder, due to which there is a shift in capital transfer and changes in balance sheets in order to change into operating cost. The outsourcing businesses are mainly in back office services. Due to unavailable in the skills, it creates more focus on core competencies and supports the high-level employee in Australia. There can be redundancies and lower in potentiality of the organization due to which employees creates loss of interest at the work place. This can directly affect the production unit of the organization as decline in output creates poor growth of the company.
Future trends- Australia stands for strong marketing in information technology, consumer markets and telecommunications. There is a changing scenario in the outsourcing business market of Australia. IT sector grows with 2 percent compared to the growth of desktop management services and application management services. More establishment of companies coming in the market to outsource the offshore business practices. An example can be as bank has major back office process therefore due to high maintenance cost it becomes cheaper in offshore. Australian markets are slowly collaborating with Europe and America. The Asia pacific business markets are third largest market while Australia is slowly coming in the group with its emerging growth trends.
Most business function carried out with allocation of resources and limited cost. There are two ways of outsourcing and that are inshore outsourcing and offshore sourcing. The offshore outsourcing means expanding part of business outside the country. The country establishes their part of business only in that country which has a good growth of the economy, increase export rate including political stability. The country always focuses on the information technology sector. In the recent years, many companies have created offshore business due to globalization and lower operating cost. . Therefore, the host country reduces the amount for labor cost, as they do not want to waste their money in training and motivating staffs. Offshore encourages for more mergers and acquisitions, sales growth, expansion in the production unit, and improvement in product quality and efficiency. When organization has good availability of resources then they can achieve their targets with less efforts and hard work. Call centers and software outsourcing has become more competitive and popular, therefore more competition leads to more growth and more profit. Australian companies outsource specific business processes and functions.
Over the past years, the growth has continued due to number of partner industries. They mainly do outsourcing in office staffs and employees from Philippines. It becomes a strong competitor with an aggressive and dominating market. Technology is the key factor for outsourcing process. Well-integrated technology creates good production output to the business. While doing an outsource business function, there are few points to consider. The organization must create an ability to complete the work with quality resources in order to avoid work failure in relation to work accuracy and timing, and efficiency. While doing outsourcing there are no national laws that regulates or monitors the outsource transactions. While applying for commercial transactions there are Sectoral laws that monitor the system. There can be different types of outsourcing that can take pace. Financial processes, IT sector, business processes, public sector, telecommunication. Incase of financial services, business outsourcing carried out through Australian legislation regulation that regulates the financial service industry.
The Australian prudential regulatory authority is the governing body that regulates the overseas outsourcing business. It includes rules and regulations on how financial service can outsource business functions. Those rules includes authorize takings of the deposits and non-operating holdings under the banking act 1959. The general insurance company and non-operating holders of the organization to come under the insurance act 1973. In terms of material business activity, the financial operational influence on failure of the service helps to improve within the time duration. The price of outsourcing arises from the share of financial services that is institution total cost. There is a problem of transferring services or bringing the business in the organization. There can be loss to the customer and the organization in terms of service failure.
A good outsourcing involves focusing on competency level, revenue sector, service sector, client advices and demands. Business after adopting outsourcing gets benefits like improvement in the growth and revenue sector, more opportunities, expansion in the line of business, faster delivery of services with fewer spans of time, and cheaper resources to fulfill more number of demands of the customers. The labor cost gets reduces and it consist of grater skills and competency level in the business. Outsourcing creates good customers relationship rather than low transaction service. Positive results and success from outsourcing clears the line between work of an organization and outsourcing activities with the help of internal processes. From the above review, one can say that good outsourcing business function overseas creates more opportunities increase in export growth and output. Outsourcing creates more line of production leading to the growth of financial position of the business organization.
Outsourcing involves small and large organizations for earning cost benefit, efficiency and leaner operations. There must be specialized skills of the employees to earn the three factors of success. The availability of small workers largely influences the customer needs as they quickly repose to their demands. Outsourcing helps in addressing business demands including the difficult ones like financial and administrative help. It created more startups to join the plan. Nearly 80 percent businesses are outsourced and majority includes offshore business practices. Australia needs outsourcing because of cheap labor, high talents and knowledge, good business opportunities, modern technology and resources, high productivity. In terms of knowledge and skills includes middle group workers in offshore business process. Outsource employees get to work done virtually, still there is flexibility for increasing scale of production.
With the same business time zone, it is easier to earn more profit and work gets easier. In case of talents, education system has their unique standards. Outsourcing business using these talents creates better work condition with good efficiency and standard in output and quality. This creates more opportunities to the business organization. Offshore workers achieve success due to fluency in the language of English. Outsource includes increase in the quality resources productivity due to proper managing of time and modern means of technology. There are cheap tickets for accessing accounting programs due to which it creates efficiency in IT sector creates cost saving. This motivated outsourcing business to invest more in this sector. All sources of business transaction can take benefit off outsourcing business functions with the help of experts.
The real part of concern is to identify properly about the part to be outsourced. If the business is critically, performing significant changes and creates important challenges, the organization ahs internal expertise to perform the functions. In such cases, outsourcing is not necessary. On the other side if there is no expertise department to look after important transactions then there must be outsourcing business process to carry out the assigned work successfully for the benefit of the organization.
While outsourcing the points to keep in mind are like create a review on the entire business. Then create an analysis about the company’s strength and weaknesses. Identify the right offshore business practice and then set the desired target company and solutions to solve the problem. It must be in an agreement format and monitor the entire outsourcing process in order to achieve a good output in case of a strong outsourcing business.
Conclusion
The report includes detailed information on business process outsourcing. It provides scope, purpose and objective of the outsourcing business functions. On addition to this, it also gives advantages and disadvantages of the outsourcing business functions. The report concludes by giving a literature review of the business process outsourcing for an Australian company.
The outsourcing business process provides back office as well as front office to the industry like call centers, human resource services and collection of debt. Outsourcing helps the business to grow with more efficiency, high output and economies of scale. Due to these factors, there is huge demand in the business outsourcing for more stable competition. Industrial revenue had a forecast of reaching 31 billion by 2017.
References
Chou, S.W., Techatassanasoontorn, A.A. and Hung, I.H., 2015. Understanding commitment in business process outsourcing relationships. Information & Management, 52(1), pp.30-43.
Cui, Z., 2017. The Impact of Switching Costs on the Outsourcing of Knowledge?Intensive Business Processes. Decision Sciences, 48(1), pp.71-107.
Doan, M.A. and McKie, D., 2017. Financial investigations: Auditing research accounts of communication in business, investor relations, and public relations (1994–2016). Public Relations Review, 43(2), pp.306-313.
Eggert, A., Eggert, A., Böhm, E., Böhm, E., Cramer, C. and Cramer, C., 2017. Business service outsourcing in manufacturing firms: an event study. Journal of Service Management, 28(3), pp.476-498.
Fountain, J.W., 2016. Outsourcing of Building Information Modeling (BIM) Among General Contractors in the United States.
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.
Hernandez, A.A. and Ona, S.E., 2016. Green IT Adoption: Lessons from the Philippines Business Process Outsourcing Industry. International Journal of Social Ecology and Sustainable Development (IJSESD), 7(1), pp.1-34.
Kim, K., Mithas, S., Whitaker, J. and Roy, P.K., 2014. Research Note—Industry-Specific Human Capital and Wages: Evidence from the Business Process Outsourcing Industry. Information Systems Research, 25(3), pp.618-638.
Lahiri, S., 2016. Does Outsourcing Really Improve Firm Performance? Empirical Evidence and Research Agenda. International Journal of Management Reviews, 18(4), pp.464-497.
Lacity, M. and Willcocks, L., 2017. Conflict resolution in business services outsourcing relationships. The Journal of Strategic Information Systems, 26(2), pp.80-100.
Liu, S., Wang, L. and Huang, W.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, 260(3), pp.1115-1128.
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.
Sople, V.V., 2016. BUSINESS PROCESS OUTSOURCING A SUPPLY CHAIN OF EXPERTISES. PHI Learning Pvt. Ltd..
Veit, D.R., Veit, D.R., Lacerda, D.P., Lacerda, D.P., Camargo, L.F.R., Camargo, L.F.R., Kipper, L.M., Kipper, L.M., Dresch, A. and Dresch, A., 2017. Towards Mode 2 knowledge production: Analysis and proposal of a framework for research in business processes. Business Process Management Journal, 23(2), pp.293-328.
Willcocks, L.P., Lacity, M.C. and Sauer, C. eds., 2017. Outsourcing and Offshoring Business Services. Springer
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