Introduction
To begin with, it is necessary to emphasize that outsourcing and the issues, closely linked with this business strategy are seriously debated in business, marketing and financial researches. Originally, the main aim of resorting to outsourcing technique is reducing of the costs. It is stated, that it is the main reason why the large IT service vendors have been among the few beneficiaries of the industry collapse.
Discussion
Originally, outsourcing provides numerous benefits for the company, which are closely linked with the reduction of expenses. The benefits also entail the access to a wide data base of skillful workers, which are eager to sell their skills, and agree to work part time. In general, the reduction of the expenses entails the reducing of the scope, preset of the quality levels, re-estimation of the costs within the organization.
Outsourcing techniques help in focusing on the essence of business activity. As outsourced working force is not related to the organization, there is no necessity to appoint control over these workers. Thus, more resources and powers are liberated for solving the internal issues and problems of the organization. The most common example is the arranging of the outsourced IT support or call center, for getting liberated from all the technical problems.
Outsourcing offers the complete cost restructuring. As It is stated in Lever (2006): “Operating leverage is a measure that compares fixed costs to variable costs. Outsourcing changes the balance of this ratio by offering a move from fixed to variable cost and also by making variable costs more predictable”.
Moreover, the outsourcing techniques also provide the opportunities for the capacity management. An improved method of capacity management is generally provided by the supplier, thus, providing the excess capacity. Increased risk management opportunities, venture capital control, tax benefits, market time reduction are also available with outsourcing. It is generally claimed that all these opportunities provide all the necessary conveniences and opportunities for running business without paying attention to technical details.
Surely, outsourcing is not a panacea, as some regard it to be. The world statistics reveal, that close to 45% of the companies are dissatisfied with the service from outsourcing suppliers. (Hira & Hira 2005) Linder (2004) in his turn emphasizes the following fact: “Quality Risk is the propensity for a product or service to be defective, due to operations-related issues. Other factors contributing to quality risk in outsourcing are poor buyer-supplier communication, lack of supplier capabilities/resources/capacity, or buyer-supplier contract enforceability. Two main concepts must be considered when considering an opportunity to observe the business system, as it related to quality risks in outsourcing: the concepts of testability and criticality.”
Initially, outsourcing entail too many risks for being regarded as a stable and reliable technique. It should be emphasized that the main issues are linked with testability, criticality, thoroughness and coverage, which may be either too low, or too high, which provides corresponding consequences. The combinations of these risks entail various problems in the spheres of services, customer care, marketing, HR management, etc.
Conclusion
In conclusion it should be emphasized that outsourcing provides numerous benefits on the one hand, and, it is dangerous for numerous risks on the other hand. Originally, it can not be regarded as panacea, still it is rather helpful tool for numerous companies.
References
Hira, R., & Hira, A. (2005). Outsourcing America: What’s behind Our National Crisis and How We Can Reclaim American Jobs. New York: AMACOM.
Lever, S. (2006). An Analysis of Managerial Motivations Behind Outsourcing Practices in Human Resources. Human Resource Planning, 20(2), 37.
Linder, J. C. (2004). Outsourcing for Radical Change: A Bold Approach to Enterprise Transformation. New York: AMACOM.