Benefits of outsourcing outweigh disadvantages - Essay Example

There is an increase in the proportion and the type of work being sent. The phenomenon of globalization has made outsourcing inevitable for organizations all over the world (Wee et al 2010). There are several motives that work behind the decision of the company to outsource its work. But, with the advantages accrued by the company as a result of outsourcing their activities, there are several disadvantages as well associated with the process of outsourcing. Therefore, it is essential to identify whether the benefits of outsourcing and offshore outsourcing outweigh the disadvantages of outsourcing due to which every third organization in the world is engaged in the process of outsourcing as a means of improving their performance (Pounder et al 2011).

The essay discusses and analyses the presence of evidences that show benefits of outsourcing outweighing the disadvantages of the process so as to gain useful insights on significance of outsourcing for today’s organizations. . The primary non core functions have also been outsourced including marketing, logistics, manufacturing, information technology, etc. (Dhar and Balakrishnan 2006) In order to make the outsourcing work, setting up of a solid upfront effort is necessary so that it can identified that right functions are outsourced, thus ensuring the best returns.

Making outsourcing a core competency is a real challenge for a business because it is necessary to achieve the potential benefits of the outsourcing process (Liou and Chuang 2010). Benefits of outsourcing project There are several direct and indirect benefits of outsourcing that are required to be discussed in order to understand and argue for the benefits outweighing the risks associated with the concerned business opportunity. The direct benefits of outsourcing includes focus on core competencies, reduction in management head counts and costs, improvement in accuracy and flexibility, access to superior technology and global networks, improved quality and reduction in capital investment.

The indirect benefits include development of resources and contacts, conversion of sluggish personal areas into the success and dynamic areas, etc. (Kolmogorovs 2006) The motives that work behind the decision of taking the route for outsourcing for improvement of efficiency and performance are dominant over the risks associated and disadvantages with the process. The first and foremost motive of the company for taking the decision of outsourcing is reduction of cost. The cost reduction improves the short term performance of the firm and the cost of outsourcing can be balanced with the resources that could have been additionally acquired for doing the work in-house (Pouder et al 2011).

Outsourcing also leads to