advantages and disadvantages of outsourcing information systems pdf

Advantages And Disadvantages Of Outsourcing Information Systems Pdf

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Outsourcing is the business practice of contracting with an outside party to take care of certain tasks instead of hiring new employees or assigning those tasks to existing staff. It's a popular way for businesses to lower operational costs and streamline operations while still handling important functions. Outsourced tasks may be occasional, such as hiring an accountant to do your taxes once a year. They may also be a regular part of business operations, such as contracting with a cleaning firm rather than hiring janitors as employees.

Advantages and Disadvantages of Outsourcing

Outsourcing is the business practice of contracting with an outside party to take care of certain tasks instead of hiring new employees or assigning those tasks to existing staff.

It's a popular way for businesses to lower operational costs and streamline operations while still handling important functions.

Outsourced tasks may be occasional, such as hiring an accountant to do your taxes once a year. They may also be a regular part of business operations, such as contracting with a cleaning firm rather than hiring janitors as employees. The businesses you outsource to may be independent consultants or other large corporations.

No matter the size of the business you work with, contracting out operational tasks can provide a variety of benefits. The back-office operations of a company tend to expand during periods of rapid growth. This expansion can tie up your human and financial resources at the expense of the core activities that made your company successful in the first place. Outsourcing important but mundane activities can allow you to refocus your in-house resources on the activities that make you profitable without sacrificing quality or service.

For example, let's say your company lands a large contract that will significantly increase the volume of purchasing in a short period of time. By outsourcing purchasing responsibilities, you free up personnel to focus on the contract itself. Sometimes the expense of purchasing equipment or needing a new location can be prohibitive. In these cases, it's more cost-effective to outsource than to expand operations internally.

It might cost far less than the price of expanding, and it is both more efficient and less expensive than relocating. Outsourcing can also lower costs by reducing the expenses associated with bringing on new employees, such as:. Working with contractors rather than employees can minimize these costs, allowing your business to get the same amount done for less.

Outsourcing can be a good option if the cost of expanding to handle those operations yourself is too expensive, would take too long to effect, or would create inefficiencies in your business model. For instance, your small doctor's office wants to accept a variety of insurance plans, but one staff member can't keep up with all the different providers and rules. Outsourcing to a firm that specializes in medical billing will cost less than hiring additional skilled staff or training existing personnel, while still increasing the benefit to your customers.

Operations with rising costs should be considered for outsourcing. Departments that might have evolved over time into uncontrolled and poorly managed areas are good candidates. An outsourcing company can often bring better management skills to your company than what would otherwise be available without significant restructuring.

For example, let's say your IT department has too many projects, not enough people, and a budget that far exceeds its contribution to your organization. An outsourcing agreement with an IT contractor will force management to prioritize their requests, bringing projects and spending back under control. Outsourcing allows operations or departments that have cyclical demands to bring in additional resources when they're necessary.

The outsourcing company can then be released when things slow down again, maintaining a company's flexibility. Outsourcing functions, such as when your accounting department is short-handed during tax season and auditing periods, provides the additional resources you need for a fixed period of time at a consistent cost. Working with the same accounting firm or contractor each time provides consistency in addition to flexibility. Outsourcing provides a level of continuity to the company while reducing the risk that a substandard level of operation could bring, even over a short period of time.

Outsourcing the human resource function reduces risk and allows the company to keep operating while the manager is unavailable. It also gives you time to hire a new assistant without rushing the decision because the office is understaffed. A large project can require skills that your staff does not possess. Let's say your company needs to upgrade custom-built equipment, but your engineers don't have the skills required to design the new and upgraded equipment.

Outsourcing this project and bringing the outsourced engineers to work on-site allows your employees to learn from the contractors while ensuring that the job is done with the necessary level of skill. Businesses often think about outsourcing purely in terms of cost savings, but outsourcing can do more than just lower expenses.

As your business grows, outsourcing can be a way to promote innovation, disrupt your industry, and access new skill sets that reposition your company in the market.

When considering how outsourcing can help you grow, don't limit yourself to looking at the cost of hiring outside contractors versus handling a task with your current staff.

Focus on the value a contractor's expertise adds to your company. Whether through expanding production, marketing your company more extensively, or disrupting the way your industry does business, outsourcing can provide an opportunity for you to innovate, grow, and rise above the competition.

Small Business Administration. Knowledge Wharton. Harvard Business School Working Knowledge. The Balance Small Business uses cookies to provide you with a great user experience. By using The Balance Small Business, you accept our. Table of Contents Expand. Table of Contents. The Advantages of Outsourcing. Core Activities. Maintain Lower Costs. Promote Growth. Operational Control. Staffing Flexibility. Continuity and Risk Management. Develop Internal Staff. Get the Most From Outsourcing.

Full Bio Follow Linkedin. Follow Twitter. Read The Balance's editorial policies. Key Takeaways Outsourcing helps you: Focus on core tasks Lower costs Promote growth Maintain operational control Offer staffing flexibility Provide continuity and risk management Develop internal staff. Article Sources.

20 Advantages and Disadvantages of Outsourcing from Your Small Business

Outsourcing allows organizations to focus on their core business and can create a competitive advantage by reducing operational costs. As an example, you can outsource the network management oversight of an IT system but keep the end-user support in-house. Organizations use outsourcing as a strategic initiative to improve customer service , quality and reduce costs. Outsourcing can be a permanent or temporary arrangement to bridge the gap in staffing, to learn better quality techniques or improvement of faulty product design. When looking for outsourcing opportunities, an organization should look at potential areas and each component within that area to determine if part or all of that function should be outsourced. Different industries outsource different aspects of their businesses, but some common operational functions that get outsourced are:. Employee compensation costs, office space expenses and other costs associated with providing a workspace or manufacturing setup are eliminated and free up resources for other purposes.


The qualitative research technique was utilized to seek more insight information from the experiences of managers and directors in various business. The.


Outsourcing

The competitiveness of most companies is in a large degree based on the effective use of information technologies and information systems especially. The main purpose of information systems are provide the right information to the right people at the right time. It is used to track, store, manipulate and distribute the information from gathered data to appropriate persons when necessary. In this post I thought to think about what advantages and disadvantages can bring to the businesses and society the integrating information systems. Of course, without any doubt the efficient usage of information systems will give a lot opportunities to the companies and advantages to their business.

Over the course of the past couple of decades, outsourcing has become one of the most hotly debated topics in American politics. Nobody likes to see jobs go overseas, and lawmakers love to use a firm stance against the threat of outsourcing as a rallying point for their wider business agendas. To help you get started, here are 20 advantages and disadvantages of outsourcing from your small business. Your core team might be fantastic at a few things, but nobody is perfect at everything. By outsourcing particular tasks, companies are often able to substantially improve performance by drawing on the niche skills of experts in certain fields.

Outsourcing

Outsourcing is an agreement in which one company hires another company to be responsible for a planned or existing activity that is or could be done internally, [1] [2] and sometimes involves transferring employees and assets from one firm to another.

Advantages and disadvantages of outsourcing

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