Outsourcing

Outsourcing refers to contracting non core activities of on organization to a third party while keep focused on core activities of the business. In other words outsourcing is where company chooses external suppliers to carry put non secondary activities of a business. The contractor is a person who specialized in the specific task and will be performing at low cost while maintaining high quality. As an example cleaning and catering tasks of business organizations are outsourced to specialized cleaning service providers and professional caters. Business process outsourcing (BPO) has become a buzz word in the modern business era where outsourced customer care centers/call centers connect people globally.

Factors to be Considered When Making Outsourcing Decision

• Degree of specialization and skills required-

If the task requires high degree of technical knowledge and specialized labour it is advisable to outsource the task to specialized firm who hold necessary technical skills.

• Time Frame-

If the task has to be completed quickly to meet deadlines it is advisable to outsource as it specialized firm hold skilled labour to complete the task in a shorter time period.

• Confidentiality of Information-

If the task involves highly sensitive and confidential information it is advisable to perform the task in house as outsourcing may lead to leaking of information.

• The risk connected to the task-

If the task is involved with high level of risk it is advisable to outsource as specialized firms are well experienced in handling Millard type of risks.

• Degree of professionalism-

If the task expects to be completed with a high degree of professionalism it is advisable to outsource the task as specialized firms provide services in professional manner.

Advantages of Outsourcing

• The quality of the task performed is high.
• Provide services at a lower cost than doing it in house.
• Professional approach to performing business tasks.
• Provide the opportunity to focus more on core activities of the business and improve them.
• Specialized and skill labour/technology is used in performing task.
• Reduces the work load of the organization.
• Reduces/transfers the business risk associated with outsourced tasks.

Disadvantages of Outsourcing

• Confidentiality of information/business process is lost.
• Creates dependencies over a third party when performing day to day activities.
• In house staff may lose the opportunity to gain some additional skills.
• Reliability of the supplier in meeting deadlines and quality targets.

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