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Outsourcing

The document discusses outsourcing, offshoring, and insourcing as business strategies for managing activities. Outsourcing involves transferring tasks to external firms for cost reduction and specialization, while offshoring relocates processes abroad, potentially affecting quality. Insourcing brings contracted work back in-house, offering greater control but requiring investment and potentially overworking employees.

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Omar El-Bouriny
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38 views2 pages

Outsourcing

The document discusses outsourcing, offshoring, and insourcing as business strategies for managing activities. Outsourcing involves transferring tasks to external firms for cost reduction and specialization, while offshoring relocates processes abroad, potentially affecting quality. Insourcing brings contracted work back in-house, offering greater control but requiring investment and potentially overworking employees.

Uploaded by

Omar El-Bouriny
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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• Outsourcing/subcontracting

• Transferring internal business activities to an external business/firm

• Same as outsourcing in HR except in production perspective

• Reasons for outsourcing

• Activities are not of great importance

• Business lacks specific skills

• To cut costs

• Advantages

• High quality standards (from specialization)

• Competitive prices (due to subcontractors)

• Reduce labour costs

• Business can focus on core activities

• Improves workforce flexibility

• Disadvantages

• Redundancies

• Affects morale

• Requires careful monitoring of subcontractors

• Presence of unethical practices

• Can lead to stained brand image/reputation

• Difficulty in quality management

• ‘Cutting corners’

• Offshoring

• Extension of outsourcing

• Relocation of business activities/processes abroad

• Reduce costs but may affect quality of output

• Same as offshoring in HR except in production perspective


• Insourcing

• Performing an otherwise contracted work internally

• May involve bringing specialists in or training employees

• Advantages

• Greater control over business functions

• May be cheaper overall (assuming business has the capacity)

• Employees may be empowered

• Boosts local economy

• Disadvantages

• Requires investment in either training or equipment

• Employees may be overworked

• Less focus on core business activities

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