Outsourcing Business Function - Business Research

Running head: BUSINESS RESEARCH
Business Research
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1BUSINESS RESEARCH
Table of Content
1.0 Introduction..........................................................................................................................2
2.0 Project Objective..................................................................................................................2
3.0 Project Scope........................................................................................................................2
4.0 Literature Review.................................................................................................................3
4.1 Advantages of Outsourcing Business Functions..............................................................3
4.2 Disadvantages of Outsourcing Business Functions.........................................................6
5.0 Conclusion............................................................................................................................8
6.0 References............................................................................................................................9

2BUSINESS RESEARCH
1.0 Introduction
Over the bygone years there has been a great amount of development in the world of
business. It is noted that with a growth and modernization of companies, the management
tend to outsource functions. Moreover, outsourcing is recognized as one the most crucial
aspects that not only benefit start-ups, but also act as a helping hand to growing firms
(Stanfield and Thompson, 2014, pp. 331-349). As compared to activities performed within an
organization, the concept additionally provides several benefits. In addition to building up
external relations with service providers, enterprises tend to enter into partnerships as well.
With a growth of outsourcing in the corporate world, the feature is now recognized to be of
strategic importance. Stanfield and Thompson (2014, pp. 331-349) also stated in their article
that being a part of a company`s fundamentals, outsourcing also has certain requirements that
needs to be fulfilled. However, outsourcing also tends to have several complications and
issues that immensely affect the smooth functioning of a firm.
This particular project focuses on the various advantages and disadvantages of outsourcing
business functions. In order to understand the concept in a detailed manner several journals,
articles, books and other secondary sources have been used. Further, the report along with
comparing and contrasting the previously published materials, also tend to focus on filling up
literature gaps.
2.0 Project Objective
The principal objectives for this project are the following:
1. To learn about the various advantages of outsourcing business functions.
2. To learn about the various disadvantages of outsourcing business functions.
3.0 Project Scope
The aspect of outsourcing in the modern world is a widespread aspect and hence needs a
careful understanding for analysis. It is noted that various reviewed sources such as journals,

3BUSINESS RESEARCH
books and articles have been utilized for this matter. Additionally, the project tends to have a
real life approach as well. In addition to depending on published works, the report
concentrates on highlight important subtopics, getting a detailed insight and thereby come to
a proper conclusion.
4.0 Literature Review
4.1 Advantages of Outsourcing Business Functions
As per Verma, Singh and Gupta (2013, p. 12), outsourcing functions in a business is of
strategic importance. It is noted that the multi-dimensional aspect can be broken down into
several individual parts. Further, benefits of the aspect can also be broken down into smaller
categories depending upon the functions. Peck (2017, p. 173) summarizes the various pros of
outsourcing into five parts: lowered production cost, tax evasion, relational rents, strategy
oriented, and flexibility. On the other hand, the journal by Smogavec and Peljhan (2016, pp.
127-131), distinguishes the various benefits offered by the feature in the following manner:
1. Expert Operations: It is with the help of experts that a company can achieve greater
results. Outsourcing enables a firm to build up stronghold relationships with
professionals of different field. In addition to a rise in capabilities, external service
providers help firms with technical know-how and investments. Moreover, skill,
competency, control and managerial efficiency also rise (Parlour, 2016, p. 89). With a
planned and well coordinated outsourcing of function, enterprise become more
competitive and gain stability.
2. Cost Reduction: Unlike the work of Peck (2017, p. 173), the journal of Smogavec
and Peljhan (2016, pp. 127-131) concentrates on a detailed discussion on this
characteristic of outsourcing. It is noted that along with production expenses, there is
downfall in operational costs. Apart from lowering working capital and unnecessary
expenditure, outsourcing helps to develop tax efficiency of organizations. On the