Business Process Outsourcing -Samples for Students-Myassignment

Question: Discuss about the Advantages and Disadvantages gained by businesses through Outsourcing Processes. Answer: Introduction Modernization of the world has provided business organizations with an expanded scope for development within and beyond a nation. A growth of companies has lead to a consequent rise of functions that along with providing a smooth ground for operations tends to support them. Among the various business tools, outsourcing of activities has gained a lot of importance in the past years. In addition to acting as a helping hand to newly set up firms, the concept provides a direction to high revenue earning companies (Gerbl et al., 2015, pp. 505-518). As compared to internally carried out functions, outsourcing process offer numerous benefits to organizations. However, Parlour (2016, p. 389) states that like every business tool, this particular aspect also haves its own set of issues and limitations that adversely affect performance levels. It is noted that outsourcing being multi-dimensional in nature significantly contributes towards building up relationship with the external world by form ing contractual agreements with service providers. On the other hand, factors like de-motivation and collapse of control within a firm are certain elements that impact gaining of profitable results from the tool (Gerbl et al., 2015, pp. 505-518). This report takes into consideration the diverse advantages and disadvantages of outsourcing business functions. The project tends to depend on a number of secondary sources such as journals, magazines, conference papers, books and articles to gain a detailed insight into the topic. Apart from understand the concept in a thorough manner, the report analyzes the reviewed materials with a motive to locate pitfalls. Project Objective. The principal objectives for this particular project are as follows: To understand the various advantages gained by businesses through outsourcing processes. To understand the various disadvantages confronted by businesses through outsourcing processes. Project Scope Outsourcing has been a topic of debate for business experts over the past few years. It is noted that the aspect requires detailed investigation before implementation. In order to evolve with a clear conclusion the project makes use of various reviewed and published resources. Moreover, the report highlights the presence of gaps in the literature along with an attempt to fill them. In addition to contrasting and comparing different materials, the project tends to locate similarities among them as well. Literature Review Advantages of Outsourcing Functions in Business As opined by Lacity and Willcocks (2014, pp. 66-92), outsourcing is recognized as a metric of strategic significance across the business industry. The diverse tool can be further differentiated into various types depending upon the variables of a company. It is noted that each category provides a set of benefits to the administration (Garrigos-Simon et al., 2015, p. 56). Based on the work of Chou et al., (2015, pp. 30-43) the pros of outsourcing can be classified into five separate parts: tax evasion, decreased manufacturing cost, relational rents, adaptability and strategic orientation. On the contrary, Auksztol and Chomuszko (2013, pp. 167-190) focuses on an extensive research and thereby grouped the various advantages of outsourcing in the following way: Expert Operations: The assistance of specialists helps an organization to accomplish more prominent outcomes. Outsourcing empowers a firm to develop firm relations with experts of various fields. Along with a growth in abilities, service providers help companies with technological knowledge and investments (Lacity and Willcocks, 2015, p. 471). Additionally, capacity, competency, control and administrative productivity likewise increase. It is noted that managers in an enterprise actively involves in a planned coordination of outsourcing activities with a motive to gain stability and competiveness. Cost Reduction: As compared to the work of Mol and Brewster (2014, pp. 351-364), the article of Auksztol and Chomuszko (2013, pp. 167-190) engage in a thorough investigation of this factor. In addition to manufacturing expenses, operation costs also tend to fall. Moreover, apart from degrading working capital and unproductive expenditure, outsourcing enhances the taxpaying capability of organizations. It is noted that there is an additionally expansion of managerial and employment capabilities alongside decrease in procedural investment. The component also guarantees bringing down of overhead expenses as well. On the other hand, there is a rise in savings within the firm. Further, Parlour (2016, p. 389) states that outsourcing not only costs less and cut down prudent expenses by 50%., but also incorporates specialization. Shift of Focus: Among the several functions and activities in a firm, there exist certain non-productive operations that affect adversely affect business Wuyts et al. (2015, pp. 61-76). Outsourcing processes essentially helps the administration of a firm to separate core exercises from the unimportant ones and which in turn help managers to concentrate on developing business. For instance, associations regularly outsource auditing and focus on manufacturing products, thereby progressing towards a determined strategy that contributes towards building a competitive edge and meet customer demands in a better manner. As stated by Mol and Brewster (2014, pp. 351-364), outsourcing practice encourages organizations to focus on centre procedures, acquire specialized knowledge and optimally utilize economies of scale. Enhanced Innovation: The reallocation of focus from unproductive practices to core processes enormously helps the administration of a business to build up a profitable market. In accordance to Auksztol and Chomuszko (2013, pp. 167-190), Gerbl et al. (2015, pp. 505-518) mentions that outsourcing noticeably guides managers to shift resources from internal operations to innovation. It is noticed that the tool enhances creativity inside the authoritative structure that further enables the workforce to develop performance and production rates. Further, innovation in a company acts as one of the most impacting motivating factors. Workload Management: Administration of time sensitive operations tends to be difficult task for the management of a firm. According to Lacity and Willcocks (2015, p. 471), outsourcing functions helps to share the excess workload with external agencies which help in a time delivery of outputs. On the contrary, Chou et al. (2015, pp. 30-43), focus on the situation to peak seasons where along with an increase of customer demands, there is a simultaneous rise of internal processes. It is noted that outsourcing crucial functions ensures quality results and achievement of business objectives in the long run. Although there is a detailed analysis of the concept in the journal of Auksztol and Chomuszko (2013, pp. 167-190), it fails to highlight real life cases. Further, no examples have been taken into consideration in this material. On the other hand, the author also does not focus on the case of SMEs. However, Smogavec and Peljhan (2016, pp. 121-152) in their article tend to point out several other benefits of outsourcing which are as follows: Risk Sharing: The management of a company indulge in risk assessing and investigation before the set up of a new venture. It is in the presence of outsourcing that a firm is able to profit from expert skills and thereby escape risky situations. Geographical Dispersion: According to Wuyts et al. (2015, pp. 61-76), expansion of the internet has lead to the creation of online mediums that escape geographical barriers. Apart from time delivery and lowered costing, outsourcing enables companies to organize activities even during holidays. Transparent Project Management: The presence of online channels tends to support outsourcing. On the contrary, removal of informal relationship within an organization and the creation of professional bonding with service providers significantly help in managing projects. Disadvantages of Outsourcing Functions in Business As stated by Smogavec and Peljhan (2016, pp. 121-152), although outsourcing provides an enterprise with several benefits, there exist certain complications that greatly impact decision making. Moreover, it is only with proper planning and coordination that the management is able to control the negatives. Similarly, Hill (2015, p. 319) also believes that the presence of challenges caused by outsourcing not only tends to set hurdles within a firm, but also severely affects its triumph in the corporate world. Lacity and Willcocks (2014, pp. 66-92) shortly breaks down the shortcomings of the aspect into five individual factors: transactional cost, hollowing out, decreased learning, innovation and opportunistic behaviour. Unlike Auksztol and Chomuszko (2013, pp. 167-190), certain characteristics like creativity, extensive scopes and operational costs are referred to as negativities of external service providers in the work of Parlour (2016, p. 389). However, the major disadvantages of outsourcing business functions mentioned in Mosca and Bordelon (2017, pp. 152-163) are the following: De-motivation: Over dependency on external agencies simultaneously leads to ignorance of organization of training initiatives for the internal employees. It is noted that there is a lack of motivation among the workplace in the absence of an interactive environment as well. However, Verma et al. (2013, p. 322) stated that coordinating with external agencies for human resource outsourcing (selection, payrolls, training, development, communication, and employee engagement) notably contributes towards building up competencies in a firm. Limited Managerial Authority: Outsourcing business processes directly or indirectly tends to limit the authority of the management. It is often that administrators are not able to extend their power beyond the boundaries of a firm. Moreover, they also do not have any control on the final output of outsourced activities. As per Vitasek et al. (2013, p. 198), a fall of authority and power of managers lead to decreased productivity of their subordinates. Risk to Plans: In order to secure results in the highly competitive surrounding, businesses tend to involve in successive planning and plotting Stanfield and Thompson(2014, pp. 412-420). Outsourcing activities might lead to negative results, thereby creating hurdles for future flow of operations. However, Hill (2015, p. 319) states that a planned approach towards outsourcing might act as a support to long term developments. On the contrary, service providers that focus on revenue generation do not intend to take into consideration the motives of a firm. Without the knowledge of a company`s objectives, agencies tend to provide unprofitable yields, thereby making the aspect of outsourcing a liability. Data Security Issues: Outsourcing activities often leads to leak of a organization`s private credentials, henceforth giving rise to ethical challenges. On the other hand, improper utilization of these data by service providers might also pose a threat to the firm`s intellectual capital Szymczak (2013, p. 151). Concerning the work of Mosca and Bordelon (2017, pp. 152-163), it is noticed that the authors fail to point out examples of companies that face regular problems due to an excess of outsourcing. Additionally, there are no solutions mentioned in the journal that will help organizations to dissolve risky situations. However, Peck (2017, p. 388) lists a few more inconveniences of incorporating outsourcing as an active process within organizational structure: Hidden Costs: Although Auksztol and Chomuszko (2013, pp. 167-190), considers outsourcing to be cheaper than internally carried out activities, there exist several hidden costs that largely impacts it success. It is noted that a increase of expenditure will affect a firm`s budget. Further, complicated contracts and its unrevealed norms also impact SMEs. No Finance Sharing: With a growth of outsourcing across the corporate world, there has been a rise of service providers who take the concept to be a great source of business. Service providers tend to complete operations for organizations in exchange of a pre-paid compensation and involve in no further relationship, thus escaping financial loses (Molinelli and Paccagnella, 2013, pp. 65-78). Public Backlash: The modern generation consider outsourcing to be foreign aspect. It is noted that people with such a belief take no notice of companies that engage in such affairs. However, Mosca and Bordelon (2017, pp. 152-163) considers this factor to be nonexistent in the real world of business. Conclusion Outsourcing being a vast topic has been a subject of argument and debate for business experts over the past few years. Based on the report it can be inferred that the rise of this strategic aspect has not only lead to a growth of external service providers, but also has forced firms to reconsider the metric. Further, outsourcing as an individual has several norms and regulations that need to be taken into consideration by firms. As compared to complications, organizations can enjoy a large diversity of benefits offered by the concept. However, it is only with the construction, controlling and coordination of proper plans that an enterprise can enjoy the several advantages of outsourcing. On the other hand, it is also noticed that there exist a detailed discussion about the concept in the works of various authors. However, some of them fail to recognize important factors like SMEs, real situations and solutions in their books, articles or journals. References Auksztol, J., and Chomuszko, M. (2013). Business processes outsourcing: Origin and development.Zarza?dzanie I Finanse,pp. 167-190. Chou, S.W., Techatassanasoontorn, A.A. and Hung, I.H., (2015). Understanding commitment in business process outsourcing relationships.Information Management,52(1), pp. 30-43. Garrigos-Simon, F. J., Gil-Pechua?n, I., and Estelles-Miguel, S. (2015).Advances in crowdsourcing. Cham: Springer, p. 56. Gerbl, M., McIvor, R., Loane, S. and Humphreys, P., (2015). A multi-theory approach to understanding the business process outsourcing decision.Journal of World Business,50(3), pp. 505-518. Hill, C. W. L. (2015).International business: Competing in the global marketplace. New York, NY: McGraw Hill Education, p. 319. Lacity, M. and Willcocks, L., (2014). Business process outsourcing and dynamic innovation.Strategic Outsourcing: An International Journal,7(1), pp. 66-92. Lacity, M. C., and Willcocks, L. (2015).Nine keys to world-class business process outsourcing. London: Bloomsbury, p. 471. Mol, M.J. and Brewster, C., (2014). The outsourcing strategy of local and multinational firms: a supply base perspective.Global Strategy Journal,4(1), pp. 351-364.Bottom of Form Molinelli, F. E., and Paccagnella, L. S. (2013).Economics of regulation and outsourcing. New York: Nova Science Publishers, pp. 65-78. Mosca, J.B. and Bordelon, G.R., (2017). Human Resource Managers Detect Management and Legal Disadvantages to Outsourcing.Business, Management and Economics Research,3(2), pp. 152-163.Bottom of Form Parlour, D. (2016).Successful outsourcing and multi-sourcing. London: Routledge, p. 389. Peck, J. (2017).Offshore: Exploring the worlds of global outsourcing. Oxford: Oxford University Press, p. 388. Smogavec, T., and Peljhan, D. (2016). Satisfaction with outsourcing: Empirical analysis on the case of SMEs.Corporate Governance, pp. 121-152. Stanfield, K., and Thompson, S. (2014). Outsourcing.Biall Handbook of Legal Information Management. Farnham : Ashgate, pp.412-420. Szymczak, M. (2013).Managing towards supply chain maturity: Business process outsourcing and offshoring. Houndmills, Basingstoke, Hampshire; New York, NY : Palgrave Macmillan,Bottom of Form p. 151. Verma, S. B., Singh, S. K., and Gupta, S. K. (2013).Business process outsourcing. New Delhi: Shree Publishers Distributors, p. 322.Bottom of FormTop of Form Vitasek, K., Ledyard, M., and Manrodt, K. B. (2013).Vested outsourcing: Five rules that will transform outsourcing. New York: Palgrave Macmillan, p. 198. Wuyts, S., Rindfleisch, A. and Citrin, A., (2015). Outsourcing customer support: The role of provider customer focus.Journal of Operations Management,35, pp. 61-76.