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Advantages and Disadvantages of Outsourcing

In: Business and Management

Submitted By aj31905
Words 1793
Pages 8
Advantages and Disadvantages of Outsourcing

Webster University

PROC 5000

Abstract

This paper examines how outsourcing affects a business positively and/or negatively.
During this paper I will discuss the advantages and disadvantages of outsourcing. There are many reasons why a company may choose to outsource a particular function of their business. The end result in mind is saving time and/or money. Before a company considers outsourcing it should first do a competitive analysis of its company before initiating an outsourcing analysis. The company should also consider the advantages and disadvantages of outsourcing. The advantages are the following: reduction in critical resources, provides ability to focus on core business, yields cost savings, provides flexibility, reduction overhead costs, etc. The disadvantages are as follows: loss of managerial control, hidden costs, threat to security and confidentiality, quality problems, tied to financial well-being of another company and bad publicity and ill-will.

When you think of outsourcing do you think of a call center in India or jobs be taken away from Americans and sent overseas? Well, since the Industrial Revolution, companies have wrestled with how they can take advantage of their competitive advantage to increase their profits. The standard for majority of the 20th century was a large integrated company that can “own, manage, and directly control” its assets. In the 1950s and 1960s, the constant theme throughout the business community was diversification to expand corporate bases and capitalize on the economies of scale. By diversifying, companies expected to shield their profits, even though expansion required numerous levels of management. Consequently, organizations trying to enter into the global market in the 1970s and 1980s were...

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