Effects of Outsourcing

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The use of outsourcing has become commonplace in today's business arena. The basic definition of outsourcing is transferring of service and/or production to an internal or external company. The most popular reason to do this lies in the interest of reducing capital expenditure over a business proceeding.


(Hira, 2005)
The process of outsourcing is continuous and does not have to be an all or nothing deal. It can occur in phases depending on current trends in the industry. The following are a list of the three main types of outsourcing:
Partial Outsourcing- This is when certain activities are kept in house such as customer service while other more specialized activities are sourced out. Plants and telecom offices would typically engage in this type of outsourcing.
No Outsourcing- The operations performed day to day are highly unique to an individual business and vital to marketing believability. An example would be a college or university. (Outsourcingsurvival, 2007)
While outsourcing operations has its benefits, there are reasons why a business should carefully examine the disadvantages it may present. One is the loss of managerial authority. It is much easier to manage employees in house than it is to manage an outsourced service provider. Outsourcing does not eliminate management responsibilities; it simply changes the nature and level of responsibility. It is also possible to lose sight of day-to-day operations while focusing on coordinating contracts with an outsourced company. Add to that the legal fees that will be incurred for putting together these contracts. ...
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