Introduction to Outsourcing
As discussed previously in assessment one, outsourcing is a very key function in business operations. Especially in this current world, a vast range of tasks are being outsourced. Increasingly, many professionals are opting to operate as independent contractors and freelancers (Ferruzzi, Marcos Antonio et al, 2011, n.p). This is what is necessitating the need for business outsourcing because there remain fewer specialists in the corporate world who can handle the needs of the businesses (Ferruzzi, Marcos Antonio et al, 2011, n.p). Other reasons why businesses are forced to do outsourcing are as outlined in the previous assessment. Renaming some of them, they include such as having the need to reduce economics of scale, to reduce short term costs, to advance the businesses in accordance to global forces and achieving the essential but non-core activities of the business without incurring unnecessary costs (Ferruzzi, Marcos Antonio et al, 2011, n.p). Both big and small businesses can outsource in accordance to their needs. The bottom-line is that outsourcing enables businesses maximize profit while incurring minimal operational cost.
The objective of this project is to identify various outsourcing strategies utilized by various companies or industries and access what leads to the choice of a certain strategy. This in turn influences the choice of partner to be outsourced to accomplish the specific task (Mutwil, Anita, 2016, p.g, 129). As much as outsourcing is mostly advantageous, it is accompanied by its own challenges especially in terms of management. This project will explain how such challenges are dealt with in order to ensure smooth co-working partnership with the outsourced partner.
This project will be an exploration of various strategies various companies utilize when considering to make use of outsourced labor. In order to come up with that, issues that influence such a choice will be determined (Mutwil, Anita, 2016, p.g, 129). Because outsourcing comes with its own challenges the project will offer suggestions in which such challenges can be dealt with in order to reduce its disadvantages (Mutwil, Anita, 2016, p.g, 129). The suggested solutions will be made to be realistic as possible so that businesses that refer to the project report can benefit because they will be implementable ideas. It is expected that this project will have been completed within duration of two months.
This summary is drawn from the literature review earlier submitted as assessment one. As the word sounds, outsourcing is delegation of tasks by a company to another party outside itself, hence the word “out”. The party could either be an independent individual/firm or another company that has specialized operations. Bringing in the services of this other firm into the business is what becomes “sourcing”. Among other things, outsourcing saves the company the cost and time of training their employees for new tasks. It can be either partial or total type of outsourcing and the choice depends on the agreement and the nature of the task to be accomplished. The outsourcing company needs to do the math and determine the pros and cons of each of this type in order to make the best choice.
Advantages of Outsourcing
One of the author outlined various theories that are used to describe the process of outsourcing. Resource based theory was described as the one where the organization bring other service providers into their own operations in order to complement their resources by providing the resources not available in their firm (Mutwil, Anita, 2016, p.g, 129). This helps optimize the resources in a manner that adds value to their organization. Based on competency theory, outsourcing is done for the non-core activities of the company while the company itself focuses on core activities that define their operations. Finally the transaction theory explains that outsourcing is done only after costs for in-house operation and for outsourcing has been done. Outsourcing is then utilized if it is cheaper.
Reasons for outsourcing range into a wide variety as some of them are outlined in the introduction above. In general it helps to reduce operational cost as in the same time the profit is maximized, enables the company to maintain focus on key activities as it delegates minor responsibilities to a third party ( Marty, 2017 n.p). The services of a third party enable the company to maintain competence relevance in the market, time-consuming activities are easily streamlined through outsourcing and the company is able to utilize outside resources maximally at low price than if it was to invest capital for the same.
Just like many other functions in a business, outsourcing was found to have its own advantages and disadvantages as well. The advantages were such as reduction of operational cost. In accordance to the transaction theory, when a company realizes that in outsourcing it will incur less cost, they go for it (Milberg, William S, and Deborah, 2013 n.p). Not only does this save cost, it also saves time. Maximum profits are obtained when the company outsources another party to carry out its non-core activities. The cost of outsourcing is higher than is for training and hiring. Such cost is avoided through outsourcing. The company is then able to focus on its core activities and in the end both ends are met as required. This in turn is tied up to its ability to maintain competency in the market because it is able to take care of its relevance.
With utilization of highly qualified professionals to carry out some of their tasks, who the company cannot be able to employ, quality and maximum products and/or services are yielded. The last advantage is that the company is able to cope with changes much more easily without having to employ or fire some workers (Milberg, William S, and Deborah, 2013 n.p). When an additional task is to be done, outsourcing helps and when the task is over, the contract is easily terminated upon agreement. Hence outsourcing gives the company flexibility.
Disadvantages of Outsourcing
Outsourcing has its own shortcomings too. These are such as the loss of control in managing the operations delegated to the outsourced team. Therefore they will not operate in accordance to the mission and standards of the company; they will operate in a manner that they too are able to obtain profit from the company sourcing them (Milberg, William S, and Deborah, 2013 n.p). There will be some hidden costs to incur, such as additional charges required during the operation but not covered in the contract. Auditing and record keeping in this case becomes a challenge. Other costs will be required in the process such as that of hiring a lawyer who is to review the contract signed (Milberg, William S, and Deborah, 2013 n.p). Another disadvantage is that involving the third party into a company’s operations is equal to loss of privacy and confidentiality (Marty, 2017 n.p). Crucial information will have to be provided to the outsourced party and unless a penalty clause against misuse of the information is provided in the contract, this will remain a risk.
Other disadvantages are such as quality problem because like any other profit-based business, the outsourced party is more concerned with profit than quality. They will also lower expenses as long as the meet the contracted conditions. The financial ties between the two companies can leave the contractor bankrupt since the operations on the project are their cost. When outsourcing calls for the need to downsize the company by firing some workers, the publicity of the company is tarnished. Only a few if any society members will take the reason for firing workers positively. This makes the name of the company to suffer in the market.
Primary research question
i. What are the various outsourcing strategies utilized by companies?
Secondary research questions
i. What determines what strategy to be utilized during outsourcing in a company?
ii. What are the challenges experienced during outsourcing?
iii. How can the challenges experienced during outsourcing be overcome?
Quantitative Research
The plan for this project is to carry out one-on-one interview to at least four managers who have ever incorporated outsourcing in the functioning of their company. The interview will enquire the strategy utilized during outsourcing and the reason for specifically those choices. If the managers will not be available for one-on-one interview, the plan is to carry out the ten minutes interview over the phone (Marty, 2017 n.p). Another method will be to use of questionnaires. The questionnaires will require the directors and managers of various identified various companies to answer anonymously to questions of how often they do outsourcing and what influences the strategy to apply during the process (Marty, 2017 n.p). The questionnaires will be distributed to as many persons as possible so long as they will be willing to fill them.
Project Objective
Qualitative Research
The data obtained in this manner will be the most reliable because it will have come from primary sources. The information will then be recorded in a data system where analysis can be done easily. Conclusions will then be drawn from this data to help answer the research questions. In quantitative research, online surveys will be done to acquire information from those persons who cannot be reached one-on-one due to geographical and time differences (Marty, 2017 n.p).
As with any other practice, this research is expected to pose challenges and limitations of its own kind. For example it is anticipated that the online interviews will not be very much reliable as any person can just choose to answer the questionnaire even if they do not have experience (Sharma, Vivek, and Varun Sharma, 2012, n.p). It is only intended to give a general overview not accurate information. This is the challenge of using virtue platform.
Another limitation that will be experienced is the in availability of managers for interviews. It is understandable that managers are generally busy people with tight schedules and demanding responsibilities that making time for such an interview will be an honor (Sharma, Vivek, and Varun Sharma, 2012, n.p). It is also clear that not all of them will be available and this will definitely affect the findings of the project.
Finally time factor will be another limitation (Milberg, William S, and Deborah, 2013 n.p). Even though it is anticipated that this research should be done in approximately two months, some factors could run out of control. Such are as unanticipated financial shortages, failed meeting time in case of interviews and such. However everything possible will be done to minimize these challenges as much as possible.
The plan for this project is to be completed within a period of three months.
Conclusion
As have been seen earlier, outsourcing is a major businesses operation and is getting more utilized with time. The knowledge gained from the literature review gives a chance to understanding the approaches to take while carrying out this project (Muench, Michael, 2011, n.p). The authors clearly expound on the issues, and any bias they may have in writing this information will be seen when carrying out the study. It has also been noted that outsourcing is not purely advantageous; instead it has its own limitations and challenges. This foreknowledge will be of use when carrying out the research, giving a hint of what to expect. The suggestions that will be made here on how to overcome and deal with the challenges will help other companies be informed as they make the decision to outsource labor in the future (Milberg, William S, and Deborah, 2013 n.p). They will be knowing the upsides and downsides of the decision. This study is aimed at developing good managers that will make informed decisions during the organizations and plans to carry out outsourcing functions,
References
Ferruzzi, Marcos Antonio et al. “Reasons For Outsourcing Services In Medium And Large Companies”. Brazilian Business Review 8.4 (2011): 44-66. Web.
Milberg, William S, and Deborah Winkler. Outsourcing Economics. 1st ed. Cambridge: Cambridge University Press, 2013. Print.
Muench, Michael. “Outsourcing Of Public-Services – Forms And Limitations”. Creative and Knowledge Society 1.2 (2011): n. page. Web.
Mutwil, Anita. “Market Analysis Of Business Process Outsourcing In Logistics”. Marketing i Zarz?dzanie 42 (2016): 127-138. Web.
Pine, Marty. “Top 7 Reasons Companies Choose To Outsource”. The Balance. Web. 27 May 2017.
Sharma, Vivek, and Varun Sharma. Web-Based And Traditional Outsourcing. 1st ed. Boca Raton, FL: CRC Press, 2012. Print.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
