Outsourcing in essence refers to elimination or reduction of particular tasks internally in exchange for price reduction by external party for the same or better quality and quantity of tasks. Such tasks and decisions are not a relinquishment of control rather than an attempt in improvement of cost efficiency as well as process improvement. There are many advantages to outsourcing including cost reduction, increase in internal human capital capabilities, as well as process improvement. Nevertheless there are certainly potential disadvantage that may include creation of artificial dependency, decrease in potential development of expertise, as well as potential loss or decrease of employment opportunity.
The essential concept of outsourcing may even be divided in two separate categories domestic and international outsourcing. Both have advantages and disadvantages. Advantages of domestic outsourcing may include creation of new jobs as well as supporting local and domestic economy. Advantages of international outsourcing may include establishment of cross national and geographic relations which may aid in market penetration as well as labor and raw material cost reduction. Both, domestic and international outsourcing may also include public relations issues as well as potential commercial legal difficulties.
Nevertheless, as in any business decision the question of outsourcing is rather on of complex nature. In order to conclude that outsourcing is either required or advisable, a given organization has to examine many facets and factors of internal issues, organizational dynamics, return on investment, local and regional political consequences, as well as the selection of particular vendor.
Ultimately, the decision to use a techniques and strategy that would lead to outsourcing has to be in the context of overall organization mission statement, vision and long term strategy. It is virtually impossible to assign a particular positive or negative value to the concept of outsourcing without examining it in the context of particular organization and economy. Yet it is obvious that outsourcing is just another tool to enable business decision makers and stakeholders to farther enhance organizational effectiveness and efficiency while increasing profitability for all the stakeholders.
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