Everyone wants to outsource some works to third parties. It is necessary when business owners want to focus on their high-level jobs. However, there are certain situations under which outsourcing may not be desirable. Reasons may vary from one organization to another (Turban and King 549).
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No firm would want to outsource EC business when the cost of outsourcing is too high. In most cases, businesses outsource some jobs in order to cut costs related to permanent staff and training of IT staff. However, under rare situations, the cost of outsourcing could be expensive, especially for startups.
Core business competencies
Firms should not outsource their core business competencies. This is where the competitive advantage of a company is. Firms use such competitive advantages to achieve their strategic objectives and missions. Thus, any attempt to delegate or transfer such jobs to a third party could compromise the main reason for business existence.
Dynamic business functions
There are business functions, which are highly dynamic and difficult to predict in terms of risk factors. For instance, customer service has become unpredictable as customers have become demanding and dynamic. Thus, such services should remain in-house because the service provider may lack the capacity to meet such challenging and dynamic roles.
Changes in management
Outsourcing should not take place during shifts among top executives. The incumbent team is the best for facilitating implementation of the process because it understands the company’s core business and the need for outsourcing.
Outsourcing is an undertaking that requires dedicated resources like time, finance, planning, and implementation with supportive leadership. Thus, firms should put on hold all outsourcing plan when there are changes in management team, until the new executive articulates business mission and the need for outsourcing.
Some firms undertake major restructuring. This might not be the best time to outsource services. Usually, when the economy is weak, some organizations may embark on internal restructuring as a way of cutting costs, reducing hierarchies, eliminating unprofitable units, consolidating, transferring staff, and refinancing operations among other initiatives. On the other hand, firms may start new operations in a strong economy without negative impacts on the business.
When firms undertake such restructuring programs, they should avoid any outsourcing without adequate orientation. Under such situations, any attempt to outsource services could result in high risk by distracting employees, executives and introducing complications in the system. Thus, any outsourcing plan should be under the management plan of senior executives so that they can have adequate concentration, stable operations, and adequate time to allow them to achieve the desired results from outsourcing.
Firms should not outsource knowledge-based functions. This is an intellectual capital, which should stay in-house. A knowledge-based economy depends on a competitive advantage. Thus, any organization must be able to control its internal business secrets and develop new concepts out of experience and skills.
Core functions that do not require any form of risks
Some risks may hamper the delivery of core functions to a firm. This is risky in situations where foreign firms provide outsourcing services. For instance, countries with political risks may undermine attempts to deliver services and payment. Thus, the firm must have special ways of mitigating and managing risks. Although such risks could be manageable, they may consume time and other resources.
Turban, Efraim and David King. Electronic Commerce 2012: Managerial and Social Networks Perspectives. 7th ed. New Jersey: Prentice Hall, 2012. Print.