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Outsourcing is the business practice of hiring a party outside a company to perform services and create goods that traditionally were performed in-house by the company's own employees and staff. Outsourcing is a practice usually undertaken by companies as a cost-cutting measure
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Presentedby Fatima Jalilova
Outsourcing is a strategic decision by a company to reduce costs and increase efficiency by hiring another individual or company to perform tasks, provide services.
In other words, outsourcing is the practice of getting certain job functions done outside a company. The process of outsourcing business functions is also called contracting out.
The most common reasons to outsource include: Reducing operating, labor, and overhead costs. Focusing more on the company’s core competencies, and thus improving its competitive advantages by outsourcing time-consuming processes to external companies.
Freeing up internal resources and using the resources for other purposes. Mitigating risk by sharing risks with external parties and building meaningful partnerships. Improving flexibility and efficiency by delegating responsibilities that are difficult to manage and control to external companies.
Disadvantages of Outsourcing Although there are several reasons to outsource, there are also disadvantages to the practice, such as: Risk of losing sensitive data and the loss of confidentiality by outsourcing activities or processes to external parties. Loss of management control and the inability to control operations of activities or processes that are outsourced.
Outsourcing companies may impose hidden or unexpected costs by creating lengthy contractual agreements with lots of fine print. Lack of quality control, as outsourcing companies are often profit-driven rather than focused on doing a good job.
