Advantages and Disadvantages of Outsourcing Business Functions: A Comprehensive Analysis

ADVANTAGES AND DISADVANTAGES OF
OUTSOURCING BUSINESS FUNCTIONS

CONTENTS
INTRODUCTION............................................................................................................................. 2
PROJECT OBJECTIVE.......................................................................................................................2
PROJECT SCOPE............................................................................................................................. 2
LITERATURE REVIEW......................................................................................................................2
RESEARCH QUESTIONS.................................................................................................................. 6
RESEARCH DESIGN AND METHODOLOGY......................................................................................6
RESEARCH LIMITATION..................................................................................................................7
TIME SCHEDULE.............................................................................................................................7
GANTT CHART................................................................................................................................8
CONCLUSION................................................................................................................................. 8
REFERENCES...................................................................................................................................9
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INTRODUCTION
Business outsourcing is the process of creating a business partnership with the third party to
provide service or product that is related to the business. The products that are outsourced are
the parts of the main products or related to parking of the products. The service that is
outsourced is related to research and development, logistics, supply chain management,
marketing, customer support and many more. This literature review is focused on advantages
and disadvantages of business process outsourcing. In this literature review material related to
business process outsourcing have been studied from different sources and presented. It helps
to gain a deep insight into the subject.
PROJECT OBJECTIVE
The objective of this project is to study the advantages and disadvantages related to business
process outsourcing in a global business environment. Study of businesses of a different sector
has been conducted in this assignment to understand the subject in detail.
PROJECT SCOPE
This project is helping to find the definition of business process outsourcing with its merits and
demerits. It highlights the importance of business process outsourcing with the challenges
related to it.
LITERATURE REVIEW
According to Andone and Pavaloaia (2010), business outsourcing defined as the process of
partnership with an external business agency for the accomplishment of the operational needs
of the business. Andone and Pavaloaia (2010) add that the need of business process
outsourcing is to the business because the business is unable to perform the desired business
objective in a profitable way; it imposes an extra operational cost on the business. According to
Rawling and Kaine (2012), the cost that is imposed on the business is due to cost of managing
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the supply chain and material related to the outsourcing. It also because the management and
maintenance cost of outsourcing is very high and do not tend to provide any real profits to the
business.
Laycity et al. (2015) stated in his review that the outsourcing gained significant importance due
to the information technology growth and development in the recent time. The production and
manufacturing of complex electronics parts were not feasible for most of the companies
dealing with the information technology products. Along with this, the cost of production and
maintenance was very high and it required high value of accuracy. Outsourcing helped several
information technology companies to overcome this challenges and develop excellent products.
Hätönen and Eriksson (2009) mentioned that outsourcing played an important role in the
development of the automobile and other sectors. Outsourcing helped the company to save a
lot of time and money that would be required to invest in the development of products. It
enabled the companies to grow a rapidly because their focus shifted to product development
from the complex management that they need to execute before.
Massini and Miozzo (2012) added that the outsourcing helped the companies to get the best
products parts from the international market; this helped the source companies to grow their
operation and became successful as a multinational company. Some of the companies that
became very successful only implemented assemble of the products that they received from
the vendors across the world and then focused on selling and manufacturing of the products.
This improved the profits of the companies significantly and reduce the work hour time the
leadership of the company used to spend in management and quality inspection.
Sengupta and Dev (2013) added that the working environment of the companies improved due
to the business process outsourcing, which helped the employee. This improvement in the
organization culture provided the companies with more profits. This improvement in the
organization culture was due to business process outsourcing by the various companies in
countries like India.
Zhang and Huang (2012) said that the growth and development of business outsourcing gave an
opportunity for growth of entrepreneurship in China and other developing countries. It helped
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