Outsourcing

• Advantages

  • Simplification → reducing activities within business
  • Efficiency and cost savings → cheaper labour
  • Increased process capability → improved tech
  • Increased accountability → service level agreements
  • Ability to focus on core business aspects → vision, purpose, sustainable advantage through innovation etc
• Disadvantages

  • Hierarchies → complex outsourcing agreements can create hierarchies and thereby maintaining business inefficiency (because businesses are moving towards a non-hierarchical structure nowadays)
  • Loss of corporate memory and vulnerability → reliance on provider which key processes and solutions may be lost during transfer
  • Information technology → cost and time into adaption of IT to specific requirements of the business - can reduce financial advantages