Businesses are set up purposes of providing a good or a service at a profitable price. In recent times, harsh economic conditions have forced businesspersons to resort on new ways of reducing operational costs. In the past managers would be faced by the difficult decision of downsizing their production and even staff in order to survive bad business. In recent times, outsourcing has emerged as one of the most popular cost reduction strategies (Carmel, and Tija, 2005).
Outsourcing is the process through which one company contracts a different company to provide a service, which could easily be performed within the contracting company (Carmel, and Tija, 2005). The contracted company is often highly specialized and provides the service at a considerably lower cost. Offshoring is the practice of relocating a business function to a company in another country. This is common for services such as call centers, which are labor intensive and require high labor costs. Other related services are in- sourcing and co- sourcing.
This paper will highlight the benefits of outsourcing and related services to business performance. Fierce competition, higher operating costs, and increased consumer awareness make business decision making harder for company executives. Managers can use these services to significantly reduce the cost of conducting business, providing quality services to customers while competing favorably in their market (Hirschheim, 2009).
Scope of Report
This report will examine business process outsourcing and related services, which are undertaken with the purpose of increasing business flexibility.
The first assumption is that outsourcing and related services is the best cost reduction option for any business. The second assumption is that companies can access outsourcing services of any services they may desire.
The main limitation of this report is that companies that outsource often combine in -sourcing and out-sourcing to create new business solutions that cannot correctly described and either of its components.
Interviews and surveys will be used to collect views from managers that have used outsourcing, customers and outsourcing companies. The questionnaires will give comprehensive look into the management benefits and challenges it presents, customer satisfaction issues and availability of the services.
Outsourcing is a dynamic business process that requires a change in management approach to ensure success. Managers have to redesign control functions, security, and quality assurance. Emerging issues in this area are labor concerns by workers afraid of losing their jobs and government control on outsourcing through legislation to secure these jobs.
Outsourcing remains one of the most viable solutions for business flexibility in a global economy. The biggest challenge lies in the ability of outsourcing companies to guarantee their customers security and quality (Vitasek, & Manrodt, 2012). In-sourcing, diversification and co-sourcing have emerged as some of the solutions to the problems of outsourcing. A better understanding of outsourcing and its alternatives could give cost effective approaches to a myriad of business operations.
Carmel, E., and Tija, P. (2005). Offshoring Information Technology: Sourcing and
to a Global Workforce. Cambridge: Cambridge University Press
Hirschheim, R. (2009). “Offshoring and the New World Order” Communications of the
ACM. 52 (11): 132-135
Vitasek, K. & Manrodt, K. (2012). Vested outsourcing: a flexible framework for
collaborative outsourcing. Strategic Outsourcing: An International Journal, 5(1):
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