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The Effects of Outsourcing on Organizational Performance

In: Social Issues

Submitted By vidocq
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Pages 66
Firms need to constantly renew and develop new capabilities and resources as they respond to challenges in their environment. These resources can be developed in-house or developed among strategic partners or purchased. Outsourcing entails the delegation of tasks or jobs from internal production to an external entity such as sub-contractor. It is the process of placing the development of system components in another development organization with the aim of achieving cost reduction and a gain in terms of production capacity and development. The main striking features of the Nigerian economy today is that available infrastructures of all types fall far below the quantities and qualities required. This naturally results in overstretching of most facilities. Despite huge potentials in almost every sector, poor overall economic performances have made it inevitable to tap unduly and at high cost and less profit than they should be. According to Alaofin (2003), “operating costs are high in Nigeria inspite of relatively cheap labour hence, running any business according to international standards is therefore costly”. He further stated that facilities management as an area is just evolving in Nigeria through janitorial services which is the best development component, has been around for nearly (5) five decades. Security services are in the stage of development. He stated that there are various merits of outsourcing which include better focus, economics of scale in purchasing and specialization. Dalhat(2009) in analyzing the development of a service industry coalition in Nigeria stated that services regulatory bodies exist, and active with existence of a strong professional class. That a well developed services sector enhances competition, leading to stimulation of economic activities and ultimately…...

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