What Are The Advantages And Disadvantages Of Outsourcing

Because many businesses in the US have more often began outsourcing different business products instead of doing them in-house, it is important to understand why outsourcing may be the best option. Although many tie outsourcing to foreign markets, outsourcing can include both foreign and domestic markets. By entering into a contractual agreement, outsourcing allows organizations to pay for services they need. This gives the option for a business to get professionals to perform services for them that the business may not have the staff for. Outsourcing provides a cost saving-strategy that is usually more affordable. Ultimately,

In general, the outsourcing is hiring the foreign workers/company to do a particular task, as opposed to hiring domestic workers/company. Besides the outsourcing, the international purchase is an essential activity of companies. In the trend of a booming global economy, a company only focuses on its core value and hire suppliers to supply the necessary product and service. The relationship between companies are complicated and interdependent.

“Outsourcing refers to the practice of contracting workers outside of a company or business for work duties or services previously performed by company employees or “in-house”. This practice is also often referred to as offshoring due to the increasingly prevalent use of “non-U.S.” service providers for these outsourced duties. However, strictly speaking, outsourcing can and does refer to the use of contracted labor provided by individuals outside of an organization, but still within the U.S.; whereas when these same services are provided outside the U.S., it is both outsourcing and offshoring.”

Outsourcing is that a product or service provided by outside vendors which but was previously provided internally or that could be provided internally(Pearlson, 2001).It is an effective approach for information system implement in a business organization but a risky one.

Let’s talk about a positive aspect of outsourcing business. “Contractual Obligation: The liability of a service provider is higher than that of an in-house employee. This makes working with them a safer bet for businesses.” At least you can be at ease that the people you are working with overseas are well trained in the business that you are outsourcing.

Outsourcing is simply obtaining goods or services from an outside supplier in place of an inside source. A great example of this is how our medical center has to outsource patients to other facilities for procedures that we are not equipped to handle. This type of outsourcing is positive because the patient gets the best care available, the base establishes

In addition to Information Technology, The Outsourcing Institute lists several other sectors that are outsourcing: Operations, such as consulting, training, records management, printing, and telephone customer support; Finance, including payroll processing, purchasing, transaction processing, and accounting; Human Resources, mainly workers’ compensation; and Sales and Marketing, in the way of direct mailings, advertising, and telephone sales.

There are many advantages to use outsourcing as a business strategy. As a rule of thumb a firm must outsource those processes that are not core processes. Internal outsourcing is defined as the concentration of internal processes to create a single or smaller compact unit. Outsourcing has its own pros and cons, but ultimately the benefits exceed the costs hence the popularity of outsourcing in modern economies.

Kamensky and Morales (2006, 45) define outsourcing as a management strategy that contracts out organizational activities to vendors or suppliers who specialize in these activities in order to perform them more efficiently and effectively. Outsourcing is defined as the practice of turning over entire business functions to an outside vendor that can supposedly can perform the specialized tasks better and less expensively than the organization choosing to outsource. Outsourcing differs from privatization in that outsourcing, the work load is shifted from in-house government providers to the private sector, but no transfer or sale of assets has occurred. Outsourcing needs the government to remain fully responsible for the provision of all services and management decisions. Other transactions include direct vendor delivery, hiring long term trained staff, etc.

Honestly, what is outsourcing and why do we as a business even need this type of idea to take place today? In order to understand outsourcing, we first have to define what outsourcing is. Outsourcing can be defined as using an outside company to provide service rather than hiring in-house workers. Now we have to determine why businesses need outsourcing. Typically businesses perform their own tasks themselves, but nowadays we find outsourcing becoming a lot more common. Outsourcing can be as simple as hiring another to do one job or as complex as putting business in abroad countries.

Outsourcing is a long-term, result-oriented business relationship with a specialized service provider. Outsourcing is easily defined as the execution of a business process to an external service provider.

As mentioned earlier outsourcing forms a part of decentralization structure. This concept of Outsourcing originally came from “American Glossary” in the year 1981. Outsourcing offers cost-effective benefits along with non-economic benefits. Outsourcing is a process of delegating a business-process of a company to a third company, leveraging benefits of reduced costs, improved quality and innovations. Outsourcing/ Downsizing became the most prevalent business trends. A very commonly considered reason for outsourcing is reduced costs, where specialized providers are more efficient and economic than a vertically integrated organization. Some organizations found it more affordable to access a few key resources from other organizations then to have an in house department working on the same. Organizations benefit from outsourcing non-core activities especially when they work in a dynamic business

An analysis of the outcomes of the outsourcing of IT functions reveals that there are several challenges facing organizations who are contemplating or have already outsourced IT business functions.

“Outsourcing is the transfer of control of a process or product to an outside supplier”(Hasan).

The outsourcing is when businesses need expertise or skills that they don't have within their organization, they often turn to outsourcing to solve their problems.