Outsourcing in Business: Advantages, Disadvantages, and Global Context

This report delves into the concept of outsourcing, examining its advantages and disadvantages in the context of global business. The report begins by defining outsourcing and its role in shifting tasks to external workforces to reduce operational burdens and costs. It then explores the advantages, such as cost-effectiveness, flexibility, and the ability to focus on core competencies, along with disadvantages like the risk of data breaches, loss of management control, and unexpected costs. The report further analyzes the role of outsourcing in the global business scenario, highlighting its impact on reducing operating costs and improving competitive advantages. Practical examples, such as Skype and Alibaba, are used to illustrate the successful implementation of outsourcing strategies. The conclusion emphasizes the importance of understanding the need for outsourcing to improve functions and drive company growth, while also addressing the need for careful implementation to mitigate potential risks.

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Executive Summary
The assignment has helped in the analysis of the outsourcing techniques and role of
the same in the business-related contexts. It has been analyzed that there are
different pros and cons of the outsourcing aspects which includes the different kinds
of issues related to loss of private data, however it can be cost-effective which helps
the different companies in managing the business operations in a successful
manner. From the various instances, it can be analyzed that there should be proper
implementation of outsourcing related contexts that can play a vital role in improving
the business operations.

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Table of Contents
Introduction...................................................................................................................3
Analysis of Concept of Outsourcing.............................................................................3
Advantages and Disadvantages of Outsourcing..........................................................3
Advantages...............................................................................................................3
Disadvantages..........................................................................................................4
Role of Outsourcing in Global Scenario of Business...................................................5
Conclusion....................................................................................................................6
References...................................................................................................................7

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Introduction
The assignment helps in analyzing and identifying the role of outsourcing in
the global business scenario. Through the implementation of outsourcing in the
different contexts of the business activities, outsourcing helps in reducing cost
related to operations along with periods of the economic decline. As commented by
Solli-Sæther and Gottschalk (2015), the outsourcing is the business-related practice
wherein the companies hire the other company or the individuals for performing the
respective kind of tasks which will be suitable for handling the operations
successfully. The main aim and purpose of the assignment is to understand the
different merits and demerits of the outsourcing along with analyzing the role of
outsourcing in the global context of the business-related activities.
Analysis of Concept of Outsourcing
As commented by Shen and Li (2015), the outsourcing is related to the
shifting of the different tasks, operations or processes to the external workforce
through contracting the third party for a significant span of the time. As opined by
Dinu (2015), the different businesses perform such activities as it helps them in
reducing the work burden and they focus mainly on the different prime tasks in which
they are specialized. Moreover, outsourcing has become a major trend in the human
resources over the last few years and it has assisted the companies for growth and it
has enhanced the overall profitability and revenue generation procedure. In addition,
as opined by Sardar, Lee and Memon (2016), there are two major reasons the
different companies decide to outsource the business activities wherein the first is to
reduce the costs related to operations and they have the entire concentration on the
different major tasks which are being performed by them. In the present scenario,
there has been huge increase in the outsourcing related activities such as Facilities,
Procurement and Facilities Management.
Advantages and Disadvantages of Outsourcing
Advantages
As commented by Moe et al. (2014), there are different merits of outsourcing
in the business scenario wherein outsourcing incurs low cost and higher benefits.

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Money plays a vital role for outsourcing as it makes the process cost-effective and
lower costs directly creates impact and increases the ROI. Instead of hiring the
different in-house workforce, the different companies prefer to outsource the
business activities to the other company which is suitable for performing the different
activities as it offers flexibility which helps in improving the overall efficiency of the
tasks which are being performed by them.
Moreover, through the incorporation of outsourcing, as commented by Kang
et al. (2014), the outsourcing can be considered to be the most suitable options
when the back-office jobs are complicated and the size of the companies prevents
them from performing such activities. In such scenario, the outsourcing can be
considered as the suitable option as it will be suitable for promoting the efficiency
and the outsourcing of such activities can be easily moved in a suitable manner.
In addition, as commented by Dinu (2015), the outsourcing helps in offering
flexibility in process of staffing as it allows the different operations which have
cyclical demand to bring in the different additional kind of resources whenever they
are required or necessary. In such scenario, the outsourcing company can be
released which will be beneficial in managing the different activities suitably.
Disadvantages
On the other hand, there are different demerits of the outsourcing in the
business-related scenario which includes the following:
As commented by Butler and Callahan (2015), there is risk of the losing of the
different sensitive data along with loss of confidentiality through outsourcing of the
different activities which can affect the growth of the company negatively. In such
scenarios, the different private data of the companies can be transferred to the
different companies which are external in nature which can affect the growth aspects
of the company negatively.
Moreover, as opined by Awino and Mutua (2014), there can be loss of
management control along with inability to control the different kinds of operations
which are being outsourced. Due to the same, it can be affecting the various
operations negatively which affects the business operations of the respective
company negatively. In addition, the different outsourcing organizations may impose

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the different kinds of hidden or the different unexpected costs through creation of
lengthy contractual agreements which can create lack of quality control as they are
focusing on the gaining of profitability rather than performing a good job.
Role of Outsourcing in Global Scenario of Business
As commented by Dinu (2015), due to the outsourcing, it helps the different
business-related activities in a suitable manner. Through the implementation of
outsourcing, it helps the different businesses in reduction of operating, overhead
costs and labor related costs as well. Additionally, with the assistance of outsourcing,
the main focus is more on the core competencies of the company and it will be
improving their competitive advantages through outsourcing which helps them in
minimizing the time which can be consumed by them and it affects the different main
activities which are the core business activities.
For example- Skype is one of the most appropriate examples which can be
analyzed wherein it is the first company which started the idea of easily
communicating with someone via phone chat (Alibabagroup.com 2019). However,
Skype was being purchased by Microsoft in the year 2011 for $8.5 billion and it still
remains the most effective communication tools. Through the help of outsourcing,
the respective company has been proved to be one of the successful companies in
the market.
Moreover, as commented by Shen and Li (2015), the outsourcing of the
business activities can assist in freeing up the internal resources and using the
respective resources for the different other purposes. The mitigation of the different
risks through sharing the risks with the different external parties along with building
meaningful partnerships can be beneficial in improving the level of flexibility. Through
proper utilization of outsourcing aspect, it can be improving and delegating the
different responsibilities which are difficult for managing and controlling to the
different external resources.
For instance- Alibaba is one of the suitable examples which can be taken as
the aspect for outsourcing their business-related activities. Alibaba started their
business as a small internet company, however the most interesting aspects related
to Alibaba is that they outsourced many of the different projects for growing and it

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has been one of the successful implementations for them in contrast to other
competitors present in market (Alibabagroup.com 2019). In the present scenario,
Alibaba has become of the most successful and large e-commerce companies in the
global context.
Conclusion
Therefore, it can be concluded that outsourcing is considered to be the major
activities which can be incorporated by the companies for focusing mainly on the
major functions. However, in many scenarios, there can be different difficulties that
can be faced by the companies due to outsourcing as there can be theft of the
private data which can be the most important confidential data. In such scenario, the
companies need to implement the outsourcing related functions in a suitable aspect
which will be simply the project management and it can be suitable for sharing the
risks appropriately. From the different instances, it can be seen that the companies
need to understand the need of outsourcing to improve their functions suitably and it
affects the growth of the company in a proper manner.

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References
Alibabagroup.com 2019 Alibaba.com - Alibaba® Official Site (online) Retrieved from
https://www.alibabagroup.com/en/global/home [Accessed on 16th August 2019]
Awino, Z.B. and Mutua, J.M., 2014. Business process outsourcing strategy and
performance of Kenyan State Corporations. Journal of emerging trends in
economics and management sciences, 5(7), pp.37-43.
Butler, M.G. and Callahan, C.M., 2014. Human resource outsourcing: Market and
operating performance effects of administrative HR functions. Journal of Business
Research, 67(2), pp.218-224.
Dinu, A.M., 2015. The risks and benefits of outsourcing. Knowledge Horizons.
Economics, 7(2), p.103.
Kang, M., Wu, X., Hong, P., Park, K. and Park, Y., 2014. The role of organizational
control in outsourcing practices: An empirical study. Journal of Purchasing and
Supply Management, 20(3), pp.177-185.
Moe, N.B., Šmite, D., Hanssen, G.K. and Barney, H., 2014. From offshore
outsourcing to insourcing and partnerships: four failed outsourcing
attempts. Empirical Software Engineering, 19(5), pp.1225-1258.
Sardar, S., Lee, Y. and Memon, M., 2016. A sustainable outsourcing strategy
regarding cost, capacity flexibility, and risk in a textile supply
chain. Sustainability, 8(3), p.234.
Shen, B. and Li, Q., 2015. Impacts of returning unsold products in retail outsourcing
fashion supply chain: A sustainability analysis. Sustainability, 7(2), pp.1172-1185.
Skype.com 2019 Skype | Communication tool for free calls and chat (online)
Retrieved from https://www.skype.com/en/ [Accessed on 16th August 2019]
Solli-Sæther, H. and Gottschalk, P., 2015. Stages-of-growth in outsourcing,
offshoring and backsourcing: back to the future?. Journal of Computer Information
Systems, 55(2), pp.88-94.