Answer to Question #270756 in Management for jayega

Question

Outsourcing is widely utilized by international business firms. Critically discuss the justification and challenges associated in outsourcing to low-cost countries. Give examples for each of your points from overseas and Pacific Island countries to illustrate your answer.

Answer 1

Disadvantages of outsourcing

Outsourcing involves handing over direct control over a business function or process to a third party. As such, it comes with certain risks. For example, when outsourcing, you may experience problems with:

• service delivery - which may fall behind time or below expectation
• confidentiality and security - which may be at risk
• lack of flexibility - contract could prove too rigid to accommodate change
• management difficulties - changes at the outsourcing company could lead to friction
• instability - the outsourcing company could go out of business