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AP115 - Advantages and Disadvantages of Outsourcing Business Functions

11 Pages3414 Words95 Views
   

Universiti Teknologi Mara

   

Advantages and Disadvantages of Outsourcing Business Functions (AP115)

   

Added on  2020-03-04

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This section of the research is the key section where the ideas of different authors will be discussed on the topic of Advantages and Disadvantages of Outsourcing Business Functions. This section contains the secondary data which contains the views and opinions taken from various sources which will help in completing the research successfully. It will discuss the literature review scope and objective, comparative analysis and quality and currency of articles.

AP115 - Advantages and Disadvantages of Outsourcing Business Functions

   

Universiti Teknologi Mara

   

Advantages and Disadvantages of Outsourcing Business Functions (AP115)

   Added on 2020-03-04

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RUNNING HEAD: Advantages and Disadvantages of Outsourcing Business FunctionsBusiness ResearchAdvantages and Disadvantages of OutsourcingBusiness Functions
AP115 - Advantages and Disadvantages of Outsourcing Business Functions_1
Advantages and Disadvantages of Outsourcing Business Functions 1Table of ContentsLiterature review...................................................................................................................................2Introduction...........................................................................................................................................2Literature Review Scope and Objective.................................................................................................2Comparative analysis.............................................................................................................................2Quality and currency of articles and sources used................................................................................6Currency of Literature Review...............................................................................................................6Gaps identified......................................................................................................................................7Conclusion.............................................................................................................................................7References.............................................................................................................................................9
AP115 - Advantages and Disadvantages of Outsourcing Business Functions_2
Advantages and Disadvantages of Outsourcing Business Functions 2Literature reviewIntroductionThis section of the research is the key section where the ideas of different authors will bediscussed on the topic ‘Advantages and Disadvantages of Outsourcing Business Functions’.This section contains the secondary data which contains the views and opinions taken fromvarious sources which will help in completing the research successfully. Outsourcing can bereferred to the process which is used for reducing the costs of the business operations bytransferring the business functions to outsiders rather than completing it internally.Outsourcing has been a topic of discussion from many years and it is often observed that it isused to achieve economies of scale. Different authors have given different views on theconcept which will be discussed here as under.Literature Review Scope and ObjectiveThe scope of the literature review is wide because Outsourcing is a wide topic which can bediscussed thoroughly. The advantages and disadvantages of the outsourcing businessfunctions will be discussed in different business areas and the thoughts of various authors willbe discussed on the topic which can cover the benefits & harms of outsourcing to the businesswith the real life examples of the corporate world to make it clearer.The main objective of the project is to identify the advantages and disadvantages ofoutsourcing business functions. This will be done by going through various articles, journalsand web sources which provides a clear idea about what different authors think about thesame. It also considers that how outsourcing has proved beneficial or failure for the realcorporate giants. Comparative analysisAccording to Krstic and Kahrovic (2015), outsourcing of business functions improves theefficiency of the business and also provides the competitive advantage of the business. Theauthor provides opinion that Outsourcing is now an important tool for the businesses and itprovides the competitive advantage to the small or large scale businesses. There are many
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Advantages and Disadvantages of Outsourcing Business Functions 3drivers for outsourcing which includes reduction of costs, savings, reduction in the capitalinvestment, focus on core competence and flexibility. In simple terms, it can be said that it ismoving the processes of business from internal service providers to the external serviceproviders in return of fee paid to the service provider. Similar to this, Iqbal & Dad (2013)added that the companies discontinue the production facilities of their own and handoverthese functions to other companies to seek better services, lesser costs and by this they canalso pay attention to their core functions. It provides overall global cost advantages which is athe most important factor for outsourcing the business functions which cannot be ignored. Asper the author, there are four reasons which are responsible for outsourcing the businessfunctions. These reasons include improvement in the cash flow, improvement in the paymentcontrol, staffing and improvement in the overall business performance (Bajec & Jakomin,2010).As per Manning, Massini & Lewin (2008), outsourcing of business function has differentviews like Transaction- Cost view, Competence- Based view & Relational view. The authorfurther adds that the global scenario is changing which is also bringing a change in theprocess of comp0leting the business functions. Outsourcing is important because it reducescosts and brings economics of scale. In the business, it brings technological advancements inthe business and the business is able to access the global talent. Outsourcing helps business tofocus on its core competencies and this is how it makes itself capable to provide improvedservices to the customers which improve the customer relationship. In contrast to thatTayauova (2012) suggested outsourcing can lead to the loss of managerial control from themanagerial operations and can also provide threat to the security and confidentiality of theorganisations. The disadvantages of the outsourcing of business operations include the hiddencosts as well which ultimately increases the cost of the operations and can also create qualityproblems. The execution of outsourcing is difficult. When an organisation outsources theservices, it expects better quality of services from the service provider which sometimesinfluences the satisfaction level of the service user. In addition to this, Soriano-Meier, Garza-Reyes, Lal & Rocha-Lona (2012) views that outsourcing of the business functions creates afear of leakage of the confidential data of the company. It creates quality issues and problemsor can also be slow in providing response.In the opinion of Brcar (2011), Outsourcing of the business functions can ensure thecompetitiveness of the firm. The author conducts a research by collecting information
AP115 - Advantages and Disadvantages of Outsourcing Business Functions_4

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