Outsourcing

• What is outsourcing?

  Contracting out business functions to third parties
• What are some benefits of outsourcing?

  Cost savings, efficiency gains, competitive advantage
• What is a potential risk of outsourcing?

  Loss of control over the outsourced function
• What are the advantages of outsourcing?

  • Improved focus on core activities
  • Increased efficiency
  • Controlled costs
  • Increased reach
  • Greater competitive advantage
  • Flexibility and agility
• How does outsourcing improve focus on core business activities?

  It allows staff to concentrate on main tasks
• Why can outsourcing lead to increased efficiency?

  Specialized companies provide more productive services
• How can outsourcing help control costs?

  It releases capital for investment in other areas
• What does increased reach through outsourcing mean?

  Access to capabilities not otherwise affordable
• How does outsourcing provide a greater competitive advantage?

  It leverages knowledge and skills across the supply chain
• How can outsourcing make a business more flexible?

  It helps adapt to changing market conditions
• What are the disadvantages of outsourcing?

  • Loss of direct control
  • Service delivery issues
  • Confidentiality and security risks
  • Lack of flexibility
  • Management difficulties
  • Instability of outsourcing company
• What is a common problem with service delivery in outsourcing?

  It may fall behind time or below expectation
• What confidentiality risk is associated with outsourcing?

  Confidentiality and security may be at risk
• What management difficulty can arise from outsourcing?

  Changes at the outsourcing company may cause friction
• What instability risk is associated with outsourcing companies?

  The outsourcing company could go out of business
• What are the issues with offshore outsourcing?

  • Hidden costs of provider selection
  • Severance and layoffs of local employees
  • Challenges in managing offshore relationships
  • Time zone differences
  • Language and cultural preferences
• Why should businesses examine the pros and cons of outsourcing carefully?

  To ensure benefits outweigh the risks
• What should businesses consider before choosing an outsourcing strategy?

  Common outsourcing considerations and risks