Week 5 Discussion 1 As we learned in Chapter 7, management’s decision-making process includes determining the most cost-effective and efficient way to run an organization

Outsourcing (sometimes referred to as "contracting out" shifts tasks,operations , jobs or processes  to an external workforce , by contracting with a third party for a significant period of time.Companies typically do this to reduce costs or improve efficiency.

 Sometimes company experiences growth at a rate it can't support with it's own internal staff.Additionally a company may have processes that only take place for a short period of time making it much more efficient to hire a temporary , outsourced team of workers for completion . As a cost saving measure, outsourcing can have significant impacts in sectors like manufacturing. Not only employee company can also  get benefits of outsourcing by purchasing of components from other source .

The biggest benefits of outsourcing is saving of time & money. Hiring a new employee may take lots of money & time to hire & train them.Thus, if company outsource , it can save time , money, equipment, rent, & other hidden costs. In regard to question how company can strength the overall performance of the company more we focus on the benefits of the outsourcing. Outsourcing increases the efficiency of the company in the sense it increases the quality services, expertise, knowledge & professional services. Also it reduces the costs & ensures the optimum utilization of the resources.

Many Business organization treats outsourcing as de facto solution, based on assumption, that saving will be achievable without in depth analysis of the real strategy & economic factors & values. Companies are focused on outsourcing mechanisms & expectations to reduce cost immediately & significantly.

Some of the common potential problems associated with outsourcing are as follows;

1)  There may be some hidden costs associated with which need to be taken care while making contract otherwise outsourcing may be more costly .

2) Outsourcing may have higher data security risks, because important data & information need to provide other companies.

3) Outsourcing may ignore the local products, manpower & local resources.

4) Outsourcing may reduce the quality because of the time factor & more focus on finishing the job rather than quality work.

5) Companies may face financial risk due to dependency on the outsourcing.

6) There is less chance of same type of customer service due to the location different & different culture.

References

Boguslauskas, V., & Kvedaraviciene, G.(2008).Strategic Outsourcing Plan & the structure of outsourcing process. Engineering Economics, 58(3),60-66.

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