Outsourcing

LITERATURE REVIEW AND THEORECTICAL FRAMEWORK

INTRODUCTION

The high level of commonality of outsourcing had made it to be regarded as the focal point to lots of organizations’ strategic developments. It is being used in order to boost performance across the entire business operation. It is a strategic decision made by a company to employ the service of an external body to carry out the task that is typically performed within the company. This concise definition of the concept only deals with operations that used to be internal to the organization and involves only the process of moving the activities to the external body. However, diverse companies engaged in outsourcing use a wider definition. Hence, based on this, it can be referred to as a process of bringing in a third party to undertake a particular product or using a technology provider to ensure new delivery channels and markets. It encompasses coordinating the relationship between the buyer and the outsourcer because the process can become an unsuccessful business transaction by neglecting the partner involved (Lanz and Barr, 2000, p.15).

However, outsourcing is a bit cumbersome in terms of financial and purchasing decisions because it involves cost savings against the aftermath of a loss in control over the service. Some examples of outsourcing are; manufacturing of components, computer services, tax compliance, payroll, benefits and compensation and other human resources-related functions. In most situations, it is a critical strategic decision characterized with implications which affect the whole organisation’s activities. Its assessment and coordination possess a lot of vital issues with a starting point which involves analyzing if it is profitable or not for the organization. This deals with issues such as; organisation’s core competencies in comparison to that of competitors, its importance to competitive advantage, suppliers’ ability to perform the required task and its effects on workers’...