HI5013 Report: Outsourcing Advantages and Disadvantages Analysis

This report provides a comprehensive analysis of outsourcing, examining its advantages and disadvantages within a global context. It defines outsourcing as a strategic approach where companies delegate functions to specialized service providers. The report explores the benefits, such as cost reduction, increased efficiency, and access to skilled resources, while also addressing drawbacks like loss of control, potential job losses, and market instability. Real-world examples, including Expensify and Whatsapp, illustrate how outsourcing impacts business operations and growth. The report concludes that while outsourcing can be beneficial for cost-effectiveness and focus on core competencies, it presents challenges related to job security and flexibility, making it a double-edged sword in the business world.

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Executive Summary
The report has helped in the analysis of the role of outsourcing in the global world that
has created huge impact on the growth of the business activities. Additionally, the
advantages as well as disadvantages of the outsourcing of the business activities have
been identified that assisted in analyzing the importance of outsourcing in the current
scenario of complex business environment. In addition, different kinds of issues related
to the outsourcing can lead to job loss that influences effectiveness of company.

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Table of Contents
Introduction........................................................................................................................3
Overview on Outsourcing..................................................................................................3
Advantages and Disadvantages of Outsourcing...............................................................4
Advantages....................................................................................................................4
Disadvantages...............................................................................................................4
Impact of Outsourcing in Global Context...........................................................................5
Conclusion.........................................................................................................................5
References.........................................................................................................................7

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Introduction
The report throws light on analyzing the aspect of outsourcing from the
perspective of the business along with identifying the pros and cons of outsourcing in
global context of performing the business-related activities. With the help of the different
practical examples of different companies, the aspect of outsourcing is required to be
analyzed that will be providing a brief overview on the tasks which are being performed
by outsourcing in the different business-related contexts.
Overview on Outsourcing
As commented by Schöner et al. (2017), the outsourcing is defined as the
strategy through which the different companies give out major type of functions to the
different specialized kind of service related providers who become the appreciated
corporate partners in the ultimate manner. In some of the cases, it can be seen that
outsourcing is inclusive of the transfer of the different employees from the company to
the outsourcing organization. In addition, as opined by Oshri, Kotlarsky and Willcocks
(2015), outsourcing is the process wherein the party is being hired outside the
organization for performing the different activities and services along with creating
goods which are conventionally were performed internal through own employees along
with staffs of companies. In addition, the outsourcing is undertaken by the various
companies as the cost-cutting measure which will be suitable for performing activities
suitably.
For instance- Expensify is one of the suitable examples in which the company
wanted to assist the people through providing the tool for collecting expenses along with
keeping the track of the different receipts along with transactions in more convenient
manner. Before becoming and forming the organization of more than 150+ employees
along with two million users, Expensify tried to partner themselves with a company
which was the outsourced international software house for taking care of the different
back end systems in a suitable manner and therefore it enabled them in concentrating

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exclusively on the different front end development as well as ultimately growing the
business strongly (ConsumerAffairs.com 2019).
Advantages and Disadvantages of Outsourcing
Advantages
As commented by Mrak, Parslow and Tomaszewski (2018), there are different
kinds of merits and demerits of the outsourcing activities by the company as it can affect
the business in a negative aspect. As opined by Dinu (2015), the different kinds of
advantages of outsourcing in the global context are as follows:
Firstly, the major reason the different businesses tend to subcontract the different
tasks is the reason that it will be done quicker in a positive manner. There will be returns
on investment which is higher as when the labor is inexpensive, the different
organizations can save money and provide customers with proper services which will be
suitable for the growth (Globerman and Vining 2017). It will be leading to advanced
sales which will be leading to better realization of revenues.
Secondly, with improved level of efficiency, the delivery of the different products
and services can be done in a quick manner along with in a convenient manner.
Moreover, when the head office of the company’s shift timings is over, the business
operations do not stop and it even continues after the office hours which enhances the
effectiveness suitably (Oshri, Kotlarsky and Willcocks 2015).
In addition, there is more management time in the present scenario, it can be
seen that when the different activities are done internally, that there are some core
competencies that can be avoided, however, after outsourcing of the different activities,
the main focus is more on the different core functions along with ensuring the fact the
company thrives and succeeds (Chen and Xiao 2015).
Disadvantages
There is loss control over the business processes as when there is outsourced
personnel are working in the remote manner, monitoring them can take time along with
effort (Dinu 2015). Even when there are inclusion of apps and other aspects, there can

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be no guarantee that the employee will be performing job right until getting the right
deliverable.
Moreover, there can be inclusion of job loss wherein outsourcing of the jobs can
have advanced domestic kind of unemployment rate and in such situation, there are
some businesses that can be using that advantage of offering the work at rate that is
lower than minimum. From the same, it can be identified that what is beneficial for one
country can be bane for the other country and it can affect the effectiveness negatively
(Gonzalez, Gasco and Llopis 2015).
Furthermore, due to the outsourcing, there is lack of flexibility in the different
business-related activities which are being performed by the different companies and it
becomes too rigid in managing the activities in a subtle manner. Additionally, as
commented by Gunasekaran et al. (2015), it can be identified that there are different
management related difficulties which is affecting the overall efficiency of the firms in an
effective manner and it affects the overall growth in a positive manner. There is huge
instability in the market wherein the outsourcing has been considered to be important as
the companies feel that there can be issues and it can go out of the business process
and it ineffectively changes the overall prospects of the business activities (Gonzalez,
Gasco and Llopis 2015).
Impact of Outsourcing in Global Context
With the help of the outsourcing, the different companies are able to achieve the
different objectives and it helps them in the cost cutting aspect suitably. The outsourcing
of the different business-related activities and processes enable in building the brand
and invest the time in research and development which will be suitable for providing
value added services in a proper manner (Gunasekaran et al. 2015). Moreover, with the
implementation of outsourcing of the different activities, it will be providing access to the
different skilled resources that will be enhancing the growth of the business and
providers like Flatworld Solutions can take care of the Resourcing Needs which will be
enhancing the growth of the company suitably. Through proper outsourcing, it can

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provide proper and efficient competitive advantage in the market and it will be
enhancing the suitability of the business processes.
For instance- Whatsapp is one of the most recent examples which can be one
of the most important aspects wherein it was founded by the former Yahoo employees
and it has been acquired by Facebook in 2013 (Ittechnologynews24.com 2019). Based
on the different publicly available data, it can be identified that the core development
was being outsourced in Russia starting with the contractor and he joined the company
as the CEO of Whatsapp.
Conclusion
Therefore, from the above, it can be concluded and inferred that the leveraging
outsourcing can truly have a positive or negative impact on the business related
activities. Outsourcing part of the client related work or the development of the product
can be suitable for the growth of the companies in an effective manner which will be
beneficial for the success of the companies and their tasks will be reduced and they can
focus on the main activities which they are specialized in as well. With the help of the
practical examples, it can be concluded that outsourcing is the boon and bane in the
business processes as it is budget friendly, however there can be job loss among
individuals that can create negative impact on the growth.

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References
Chen, K. and Xiao, T., 2015. Outsourcing strategy and production disruption of supply
chain with demand and capacity allocation uncertainties. International Journal of
Production Economics, 170, pp.243-257.
ConsumerAffairs.com 2019 Software company Expensify admits to outsourcing work
containing sensitive data (online) Retrieved from
https://www.consumeraffairs.com/news/software-company-expensify-admits-to-
outsourcing-work-containing-sensitive-data-113017.html [Accessed on 9th August 2019]
Dinu, A.M., 2015. The risks and benefits of outsourcing. Knowledge Horizons.
Economics, 7(2), p.103.
Globerman, S. and Vining, A.R., 2017. The outsourcing decision: A strategic framework.
In Global outsourcing strategies (pp. 27-40). Routledge.
Gonzalez, R., Gasco, J.L. and Llopis, J., 2015. Information systems outsourcing
satisfaction: some explanatory factors. Industrial Management & Data Systems, 115(6),
pp.1067-1085.
Gunasekaran, A., Irani, Z., Choy, K.L., Filippi, L. and Papadopoulos, T., 2015.
Performance measures and metrics in outsourcing decisions: A review for research and
applications. International Journal of Production Economics, 161, pp.153-166.
Ittechnologynews24.com (2019) Software Outsourcing Market 2019 is Flourishing
Worldwide (online) Retrieved from https://www.ittechnologynews24.com/software-
outsourcing-market-2019-is-flourishing-worldwide-with-leading-vendors-accenture-hcl-
technologies-hpe-ibm-tcs-oracle-cognizant-infosys-capgemini-ntt-data/ [Accessed on 9th
August 2019]
Mrak, R.E., Parslow, T.G. and Tomaszewski, J.E., 2018. Outsourcing of academic
clinical laboratories: experiences and lessons from the association of pathology chairs
laboratory outsourcing survey. Academic pathology, 5, p.2374289518765435.

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Oshri, I., Kotlarsky, J. and Willcocks, L.P., 2015. The Handbook of Global Outsourcing
and Offshoring 3rd Edition. Springer.
Schöner, C.R., Schöner, M.G., Grafe, T.U., Clarke, C.M., Dombrowski, L., Tan, M.C.
and Kerth, G., 2017. Ecological outsourcing: a pitcher plant benefits from transferring
pre‐digestion of prey to a bat mutualist. Journal of Ecology, 105(2), pp.400-411.