Outsourcing and Company

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Outsourcing

Contents
What is Outsourcing?3
Advantages of Outsourcing3
Disadvantages of Outsourcing3
Types of Outsourcing4
Outsourcing for e-Business5
Real Companies6
Conclusion6
Bibliography / References7

What is Outsourcing?

Outsourcing, sometimes called offshoring, is the act of a company contracting another company to provide or generate services that could be done by the employees of the company. The main reason to do this is because most of the time is cheaper if another company provide those services than the company doing it by itself. There is still a chance that there is a lack of experience in some parts of the company or business, and because of this, outsourcing is required. Some of the services that are nowadays outsourced are frequently call centre services, payroll services and e-mail services among others.

Advantages of Outsourcing

The first advantage and the most important is cheaper. When a service is outsourced it cost less than implementing that service on the company, due to different factors such as hiring and training personnel, buying new and adequate equipment among other, because the company that you are going to outsourced services from is supposed to have all of these things already in the company. Another Advantage of outsourcing is a strategic optimization; this allows your company to focus on important things for the main goal of the company rather than having to focus on operations that may disturb the main goal. One more advantage is the availability of companies that outsource services in the market, allowing you to be able to choose from a different range of companies, depending of the services they provide, the money that they cost, which one is the leader on the field. There are services that can be outsourced to different countries, saving a lot of money in taxes and wages.

Disadvantages of Outsourcing

The first disadvantage is the loss of expertise, after a while outsourcing a service, it may be difficult to reincorporate the service to the company due to the lack of background, because the company has not done the particular service for a long term, it has lost experience. Another disadvantage is experience and quality of the supplier, if the company that you choose to outsource some services does not have enough experience or the quality of the service deteriorates with time, it would be much better to change the company or start providing those services in your own company. There is still a risk of losing control over the cost, sometimes the profit that it may generate the service provided by your company it may be higher than the profit generated by outsourcing the service to another company. One more disadvantage is communication problems, because when we outsource services me hire another company, not always things can be done as we want, this is more specific to call centres and IT services that are outsourced. Also customers may not like when a company outsource call centre services because of many reasons, the call centre may be allocated in a different country, or sometimes the operators does not resolve the problems and enquiries of the customers as the company could do.

Types of Outsourcing

There is an article written by Carol Francois(2003) where she talks about four different types of outsourcing: professional, manufacturing, process-specific and operational. About the professional outsourcing, She includes accounting, legal, purchasing, IT support and other specialized services. She defines this type of outsourcing as the most common as she says: “This is the most common area for outsourcing services, because of the potential cost savings associated with this type of arrangement.” In manufacturing outsourcing Ms Francois focus this type of outsourcing mainly for companies who outsource services for production lines and she also emphasis some risks saying: “The primary risks with this type of arrangement are...
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