Outsourcing

Outsourcing

“The practice of outsourcing has developed rapidly in recent years and has moved on from involving relatively peripheral activities such as catering and security as more and more companies have come to appreciate the role it can play in strategy” (Philip Sadler & James C. Craig, 2003). At the moment, outsourcing encompasses manufacturing, design, distribution, human resource management and information systems. Outsourcing takes place when a company makes a decision to consent to an outside company to take responsibilities for certain divisions of their operation. A company may chose to make use of an outsourcing company to modernize their working performances, to boost the efficiency and the effectiveness of a division of their business operation or it may perhaps be to boost the resources in that division of the business which would lead to increased production and output. Nevertheless, the essential reason and condition, is to make available extra management support to the company to improve the cost effectiveness through the competently of their general operation. “The term “outsourcing” was first used in the 1980’s and described the contracting out of information systems (Espino-Rodríguez & Padrón-Robaina, 2006). Today the concept of outsourcing is no longer limited to information systems, but is known in combination with all possible business functions that are feasible for contracting them out to an external provider” (Espino-Rodríguez & Padrón-Robaina, 2006). Espino-Rodríguez & Padrón-Robaina, (2006) furthermore defined outsourcing as “a strategic decision that entails the external contracting of determined non-strategic activities or business processes necessary for the manufacture of goods or the provision of services by the means of agreements or contracts with higher capability firms to undertake those activities or business processes, with the aim of improving the competitive advantages”. The single most vital tactical reason for...