Advantages And Disadvantages Of Outsourcing

In business, outsourcing engages the contracting out of a business process to another party (compare business process outsourcing). Outsourcing occasionally involves transferring employees and assets from one firm to another, but not always. Outsourcing is also the hold of handing over control of public services to for-profit corporation (online, 2016)
Outsourcing is an deal in which a company provides services for another company that could also be or usually have been provided in-house. Outsourcing is a style that is becoming more common in information tools and other industries for services that have usually been regarded as inherent to managing a business. In some cases, the entire information management of a company is outsourced, including
First, many researchers agree on the fact that by handing over noncore activities to a trusted third party, a company can concentrate on activities central to its value proposition and enlarge its competitive positioning . Second, outsourcing in general is held toward one of the main goals as cost savings. The special necessity arises when a certain resource, either human or equipment resources, is not needed full time, or the efforts to obtain the resource cannot be justified. Third, by outsourcing companies have the option to access to highly qualified personnel, who may not be available to the client organization and fully exploit the suppliers’ investments, innovations, and specialist capabilities. Fourth, an important reason for outsourcing consideration is achievement of an improvement in performance that the outsourcer company might offer due to economies of scale. Fifth, flexibility is the clarification reason for outsourcing for many companies. Outsourcers’ contracts and the jobs of their employees depend on the degree of flexibility to reveal changing business
First, disadvantage related to the loss of control over the outsourced operations stems from the reason that managing external resources requires special skills which is a combination of the skills of people and process management, contract management, and power compromise. Second, almost every outsourcing contract has terms of security and privacy spelled out, but the execution and audit are always tricky. In financial services, requirements keep information known to investment bankers away from traders, brokers, and other individuals who might attempt to use such insider information improperly. Third, one reason to outsource is the expectation of receiving better service from the outsourcer than from internal staff. Outsourcer has to be chosen in that particular way to ensure that there is no bad influence on the quality of goods and services produced. Otherwise, company may lose its position on the market. Fourth, company will sign a contract with the outsourcing company that will cover the information of the service that they will be provided that. Fifth, the outsourcing is often connected to the dismissal in employees’ minds. It is also a problem for the organization’s top management team to decide how to reallocate the existing employees. (Gulzhanat Tayauova, online,