Outsourcing Business And Functions Essay

Question:

Discuss about the Advantage And Disadvantage Of Outsourcing Business Functions.

Answer:

Introduction

Business process outsourcing is a process opted by business that is being very common in today’s world. This is because of the increasing number of responsibility and complications in the business process. Thus, the businesses choose to source out some of their processes to the third party. While doing this the business chooses its crucial and profitable processes from its unimportant tasks and sources out the tasks, which is not so important to the business. These processes can also be a type of supporting services to the business such as their call centre service, pay roll departments, facility department and many more (Gerbl et. al. 2015).

This paper will focus on the objective and the scope of business outsourcing in the world and will further discuss the various advantages and disadvantages of this process. For doing this it will suggest some methods and a timeline which will help to carry out the research on the pros and cons of outsourcing effectively.

Project Objective

The paper focuses on certain objectives such as

  • To analyse the meaning of outsourcing in various types of business processes
  • Advantages of carrying out business outsourcing process
  • Analysing the challenges and cons from carrying out this function
  • Analysing the effect of both pros and cons of outsourcing for shaping the decision making of the business

Project Scope

Outsourcing is growing in the business environment in today’s world due to the growing trend of globalisation. The speed of globalisation has made the outsourcing process a crucial one for the business. Thus, this topic is an important one based on the environment of the businesses globally. The topic of outsourcing is very wide if applied on any process. However, this research will only focus only on the advantages and disadvantages that this process poses on the working of the companies. For showing the validity of the research the ideas given by various writers will be summarized below and then some qualitative and quantitative research method will be suggested to get the accurate and feasible result of the research.

Literature Review

The literature review stated in the previous assignment has effectively discussed on the advantages and disadvantages the process puts on the organisation, which also gives them the reason of using this process in their own business process. According to some of the writers outsourcing helps the organisation to save on their cost by providing heir most expensive services to the third partner of the business. They can choose their third party form the country where that particular activity is cheap and will help them to attain it at relatively less cost. It has been also stated that out sourcing helps the business to carry out their business process more efficiently by transferring the process to the partner company, which has an expertise on that. This helps the company to get full efficiency from that process that too with a very little capital expenditure. Further, it has been evident that out sourcing helps to company to get their task complete from their partners on the stipulated time. Outsourcing also allows the businesses to tae gain of staff flexibility depending on the seasons or the availability of customers and clients in the business. Thus, the process of out sourcing has been viewed in reducing risk in the business.

Some authors have also criticised the method of out sourcing adopted by companies. The criticism shows the problems and threat outsourcing puts on the business rather than giving any benefits. The argument states that outsourcing has lead to a disadvantage to the businesses they tend to loss control on their employees rather than gaining anything from it. As it has been stated that this process has helped the company to decrease their cost; however, the process was seen to increase the cost for the industry such as the transaction cost, cost on innovation and partnering activities and also opportunity cost. Moreover, there were incident of conflict between the partners and the parent company and loss of confidentiality in their processes. Further it has also been viewed that outsourcing creats a problem of accumulating the deliverables offered by the partners after completing their services. Thus, the overall activity of the outsourcing process has a bad influence on the business image by reducing the quality of business functions (Chou, Techatassanasoontorn, and Hung 2015).

The literature review analysed the advantage and disadvantage of business process outsources. However, it has failed to discuss about the amount of acceptance the business outsourcing process has made in these years. Further, it has also failed to analyse whether the pros fro outsourcing is more to outweigh the disadvantages or vice versa. This will help the business to take their business decisions easily. Thus, there is a gap in analysing the past literature about the effect of outsourcing on various process of business. The gap will have a negative impact on the further estimation of the hypothesis on to how the advantages and disadvantages of outsourcing influence the decision of the company to adopt this process or not. Thus further literature needs to be viewed on the rate of advantage or disadvantage of outsourcing.

Research Questions/Hypothesis

Primary Question

  • How does advantages and disadvantages of outsourcing business function influence the decision of the firm for adopting outsourcing process?

Secondary Questions

  • What is meant by outsourcing of business processes?
  • What are the advantages and disadvantages of business process outsourcing?
  • Is advantages more than disadvantages exerted by the outsourcing process?
  • Is the cons overtakes the cons of the outsourcing process?
  • What is the chance that the business will adopt outsourcing depending on its effect?

Research Design and Methodology

Qualitative research

The research will adopt some qualitative method for analysing the effect and rate of adoption of outsourcing process in business activities. The qualitative research will help the researcher to analyse the quality of the process that is being discussed here. For the analysis, a simple primary research method will be used in the form of random sampling method by taking a sample of 20 companies. A simple random sampling will help the researcher to take up information from all kinds of companies on their thinking about outsourcing their business activities. This will help the researcher know what kind of industry take up outsourcing process even with the risk associated with it. Thus, data will be collected in a form of a questionnaire which will be send to the companies to be surveyed via mails, emails and also the researcher will visit some companies personally and fill up the questionnaires (AnfaraJr, and Mertz 2014).

Quantitative research

The research will also follow certain quantitative design to calculate the number of advantages and disadvantages stated by the companies to see the extent of pros and cons associated with outsourcing. A sampling of 20 companies will be used for the survey. The survey will be done in the form of a questionnaire, which will consist both closed end and ope end question to allow the user to give their own views on it. There will also be some rating scale questions, which will help us get some supporting views of the outsourcing process. Further, a descriptive quantitative method will be used to explain the result obtained from the research that is whether companies are against out sourcing or supports outsourcing process. It will also help us to know whether outsourcing has more advantages or more disadvantages according to the companies (Creswell 2013).

Research Limitations

Every research has some limitations that need to be kept in mind in order to finish it with maximum effectiveness. No research process is free from limitations and not considering the limitations appropriately will affect the whole result of the research. One of the most crucial limitation every research faces is the time. Considering the time limitation is vey important in order to systemize every activity of the research. Thus, it is necessary that the researcher allot a time to each activity and try to finish within that. Second consideration is the budget, which also poses a limitation. Thus, while designing the research process a budget should also be formed to divide it for every activity

Time Schedule (Research plan)

List the task

Design the Questionnaire

Mailing the questionnaire and visiting the companies

Filling up the questionnaire

Analysing the questionnaire

Summarising the result

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Table 1: Time line for the research activities

Source: (Author’s creation)

Conclusion

Thus from the above discussion it can be deduced that the research focuses on the rate of acceptance of business process outsourcing by viewing the advantages and disadvantages of the process. For the purpose, both qualitative and quantitative method is selected and the survey will be done with the help of a questionnaire by either mailing it to the companies or visiting the companies personally. The data collected will then be analysed in a descriptive format to make it easily understood by everybody. However, some of the limitations such as time and budget also needs to be considered while moving on with the project.

References

Anfara Jr, V.A. and Mertz, N.T. eds., 2014. Theoretical frameworks in qualitative research. Sage publications.

Chou, S.W., Techatassanasoontorn, A.A. and Hung, I.H., 2015. Understanding commitment in business process outsourcing relationships. Information & Management, 52(1), pp.30-43.

Creswell, J.W., 2013. Research design: Qualitative, quantitative, and mixed methods approaches. Sage publications.

Gerbl, M., McIvor, R., Loane, S. and Humphreys, P., 2015. A multi-theory approach to understanding the business process outsourcing decision. Journal of World Business, 50(3), pp.505-518.

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