Advantages and Disadvantages of Outsourcing

Table of contents

Executive Summary 2

1.0 Introduction 3

2.0 Outsourcing as a strategic tool 3

3.0 Jobs and functions that are outsourced 4

4.0 Advantages and disadvantages of outsourcing for the home country 5

5.0 Advantages and Disadvantages of outsourcing for the host country 7

6.0 Is outsourcing a viable strategic tool? 11

7.0 Recommendations 12

7.1 For the companies 12

7.2 For the home country 13

7.3 For the host country 13

8.0 Conclusion 13

9.0 Reference List 15

Executive Summary

This report explains the concept of outsourcing and gives reasons why organizations use outsourcing as a strategic tool. Three businesses that outsourced job functions have been taken: Nike, Apple and Royal Dutch Shell Plc have been chosen to contrast the advantages and the disadvantages of outsourcing for both the home and host country. Moreover, the report interprets that outsourcing is here to stay and it is found that agreements are the assurance that outsourcing will stay. The report ends with recommendations for the success of the three companies and for the benefit of both the home country and the host country; emphasizing on the fact that co-operation among the businesses, the governments of the home country and that of the host country will be the key to the success of outsourcing. The purpose of this paper is to analyze the outsourcing concept and also to indentify the advantages and disadvantages of outsourcing for both the home and host countries and as a result to evaluate if outsourcing is a viable strategic tool.

1.0 Introduction

Outsourcing refers to the delegation of some business processes to a third party, who manages them on behalf of the organisation (Beulen, Ribbers and Roos 2011, 105; Waters 2010, 165). It can further be suggested that transfer of employees and assets are involved in the outsourcing process (Wijers and Verhoef 2009, 1). Examples of companies illustrating the outsourcing concept are numerous. The BPO industry emerging in...