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Assignment 3 Requirement
Assignment 3 Reflective writing aims to get you to think
about your learning and understand your learning experiences.
When students writing Assignment 3 need to follow steps:
- Evaluate the effectiveness and your usefulness of the learning experience
Make judgements that are clearly connected to observations you have made. Answer the questions:
- What is your opinion about learning experience?
- What is the value of this experience?
- Explain how this learning process will be useful to you
Consider: In what ways might this learning experience serve you in:
- course
- program
- future career
- life generally
Answer the question: ‘How you will transfer or apply your new knowledge and
insights in the future?’
- Describe objectively what happened in the learning process
Give the details of what happened in the learning process. Answer the question:
‘What you did, read, see, and hear?
- Evaluate what you learn
Make judgments connected to observations you have made in the Business
Research. Answer the question: ‘How Business Research was useful for your
Research Learning Process?’
- Explain your learning process:
New insights, connections with other learning, your feelings, hypotheses,
conclusions. Answer the questions:
‘What was the reason you did particular activities (Assignment 1, Assignment 2?
- Explain Plan how this learning you will applied
Comment on its relevance to your research subject, your course, future profession,
life… Answer the question: ‘How might this learning apply in your future?’
Assessment 3: Individual Reflective Journal – Individual Assignment (1000-1500 words) For this assessment, students are expected to write a weekly journal over the duration of the 12-week teaching period that documents a critical analysis of their learning process. In the journal students need to reflect/review how they have progressed with the learning goals related to assessments 1 and 2. Students need to write their individual reflective journal concurrently to performing assessment tasks 1 and 2, i.e. from the first week of the subject. For each week, students need to make journal entries that provide a reflection of their ‘journey’ of gaining, and applying knowledge of the research paradigm. For each week students should reflect and compare the theoretical knowledge with what they apply into practice. As assessment 1 and 2 are completed, students should clearly identify learning goals achieved.
Literature Review
Advantages and Disadvantages of Outsourcing Business Functions
Name
Institution
Literature Review
Advantages and Disadvantages of Outsourcing Business Functions
Introduction
In the business world, there are several aspects of operations that need to be handled as either part of business or related to the business. For instance, cleaning, maintenance and catering services may be needed in the firm to support the core business functions. Arguably, most businesses may not be able to handle these aspects internally. They therefore end up allocating such duties or business aspects to specialist external service providers. In some cases,Bucki, (2017)notes that business aspects such as maintenance may be temporary to a level where hiring in-house professionals is not cost-efficient or practical. The external services provider then takes the full responsibility of conducting the specified tasks (Global Outsourcing Agency, n.d.). The allocation of business services to external providers may also involve purchasing products from external suppliers. The entire allocation of business services to external providers is referred to as the outsourcing of business functions.
There has been a tremendous growth in the outsourcing of business functions trends in the recent years. Primarily, Dad&Iqbal, (2013) claim that this has been attributed to a shift in business philosophy. Outsourcing has been around since the 1980s when firms sought the services of external companies to reduce the risk. The concept of outsourcing comes in different forms. It may range from selective sourcing or total outsourcing. Either way, the idea is to have an external service provider handle specific aspects of the business (Riggins, 2017). Therefore, the area of outsourcing business functions has received significant attention from researchers, scholars and analysts. It has been argued that a firm should not just decide to outsourcing without assessing the potential benefits and resultant downsides of outsourcing business functions. It should be noted that, despite the fact the outsourcing business functions may look beneficial; it may pose several limitations to the business.
Project Objectives
The main aim of this research is to investigate the advantages and disadvantages of outsourcing business functions. It has been established that assessing the merits and demerits of outsourcing business functions will help business managers to make the right decisions about the allocation of specific business functions to external service providers. Therefore specific objectives of the project include:
- To establish the benefits that businesses enjoys from outsourcing business functions
- To determine the downsides or limitations of outsourcing business functions
Project Scope
Evidently, from the definition of outsourcing, it is clear that the concept is not a broad area of research. Outsourcing only takes a single dimension; allocating business functions to an external service provider rather than hiring in-house professionals(Global Outsourcing Agency, n.d.). Therefore, this literature review, concerning the topic of study, will be limited to the benefits and downsides of outsourcing business functions. This limited focus is meant to ensure that the assessment of the significance of outsourcing business functions is sufficiently addressed. However, within this review, the researcher will also focus on dissecting the concept of outsourcing business functions and how companies specifically conduct it.
Literature Review: The Advantages of Outsourcing Business Functions
Focus on Core Processes and Functions
Across the studies conducted on this topic as well as analysts who have assessed the subject, the idea of focusing on core business processes resonates as the main benefit of outsourcing business functions. According to Bucki, (2017) outsourcing business functions (especially those that are supportive or subordinate in nature) gives the management more time to focus and strengthen their core business processes. Notably, when the staff of a company gets involved in functions that may not be core, their time as well as main focus may be interrupted and wasted (Bounfour, 1999). Outsourcing business functions eliminates distractions and also helps the management to focus on sharpening skills that are vital for achieving the core business objectives.Ranieri (2017) argues that start-ups stand to benefit a lot from outsourcing business functions because it gives the entrepreneur time to focus on core functions such as sales and marketing rather than processes such as payroll. In other words, while accounting is an essential part of the business, it is not a core function. Therefore, when accounting services are outsourced, a company will have more time to focus on core processes and functions.
Saving Costs
Outsourcing business functions is relatively cheaper than hiring in-house professionals for permanent or full time work. Firstly, the company saves time that could otherwise be used in the recruitment process. The money that could also be used for recruitment processes is also saved. More importantly, the turning of fixed costs into variable costs frees up capital which gives the firm a competitive edge(Frank, 1998; Bounfour, 1999). Cost advantage is one thing that every manager would like to have in their company. Operating costs, training costs, manpower, effort, and time wastage are all reduced through the outsourcing of business functions. Analysts argue that outsourcing helps the management to achieve higher cost control over the outsourced function. By virtue of the transaction volume,Bucki, (2017) suggests that the external service provider is more efficient because they are specialized in the outsourced function. However, some scholars argue that in some cases the cost of outsourcing could surpass that of hiring in-house professionals on full time basis depending on the outsourced function and where the services have been outsourced from (locally or internationally).
Efficiency and Quality of Outcomes
Every company desires to outsource business functions from external service providers who are not only reputable but also specialized in the area with sufficient expertise. This type of expertise is technical and can barely be achieved by the outsourcing companyDad &Iqbal, (2013). It means that outsourcing business functions facilitates the speedy and efficient completion of tasks. It also means that outsourcing ensures that the output is comparatively of quality nature(Global Outsourcing Agency, n.d.). Specialization and technical expertise are two vital factors that guarantee quality outcomes. A good example is where a company outsources cleaning services.
Normally, if cleaning was to be done internally, the level of expertise needed to guarantee quality outcomes may not be achieved in the company. However, when cleaning services are outsourced, the quality of output is greatly improved because the services are premium and transaction based(Riggins, 2017). Apparently, such kinds of transaction are coupled with a great sense of corporate accountability where the payment for services must match the same services provided. The legality, practicality and fiscal implications of outsourcing business functions cannot be achieved internally.
Risk-Sharing, Flexibility and Customer Satisfaction
Risk assessment and analysis is one of the most significant factors in any business. It helps determine mitigation measures and strategies that can address potential loopholes. Outsourcing business functions therefore gives the company power to plan and mitigate the risks. This is because the risks are shared between the company and the respective firm where services have been outsourced from(NIBusiness, n.d.). When certain responsibilities and duties in the company are shifted to the external service provider, the risks associated with the outsourced function are shared between the firm and the external service provider(Frank, 1998). A great sense of flexibility is achieved from outsourcing because operations are streamlined, the staff is focused on core objectives and the management can concentrate their efforts of training their staff to sufficiently meet the organizational objectives. The overall outcome of these merits of outsourcing business functions is improved efficiency, enhanced performance and high quality products or services(Global Outsourcing Agency, n.d.). Therefore, it is arguable that outsourcing business functions enhances customer satisfaction. When customers are contented with service delivery, they become loyal to the firm. The company then benefits from repeat sales and referrals.
The Disadvantages of Outsourcing Business Functions
The Threat of Security and Confidentiality of Company Data
Although there lacks consensus among scholars on the demerits of outsourcing business functions, some agree that the threat of security and risk of disclosure of confidential information is a bigger limitation of the process. For instance, when accounting services are outsourced, the external service provider will have access to confidential data and sensitive proprietary information which if lost or stolen, the company will be on the losing end. There are countable instances where external service providers have been suspected of having illegally accessed or leaked data meant to be confidential(Tayauova, 2012; Bounfour, 1999). Third party access to confidential data cannot be mitigated especially if the contract signed between the two firms does not have any terms that relate to the security and confidentiality of data. Nevertheless, companies have gone ahead to establish policies that tend to govern the access or treatment of confidential data to third parties (Bucki,2017). Nowadays, the threat of security and confidentiality of company data is one of the main concerns that companies strive to achieve before they engage in any contractual agreements with external service providers.
Loss of Managerial Control (over quality)
Outsourcing business functions means that the quality control of a specific function is transferred to the external service provider. This external service provider may not have the same standards and managerial company as the outsourcing firm.According to Tayauova, (2012) the disparity in mission and standards that drive these two companies could be a source of reduced quality outcomes or output. Evidently, the external service provider is always after making profits or incoming from the services provided (Frank, 1998). The external service provider, regardless of the standards of the service offered, is paid. Most companies have a tendency of avoiding outsourcing business functions because they fear losing managerial control within the company. It is recommendable that a company identifies service levels in the contractual agreement with a measurable process of quality service reporting. All the same, it is vital to ensure that the company whose services are sought should be reputable with a clean track record before they are contracted to offer services for the specified business function.
Inflexibility to Change
Another major limitation of outsourcing business functions is that effecting change could prove difficult and intricate process. The outsourcing contract is always too rigid to accommodate any form of change(Tayauova, 2012). For instance, when a company seeks to transfer its services to the cloud (implement cloud computing) it may need to transfer its services from manual to computerized. The presence of an external accountant in the company makes it difficult to effect such a change. Change is an essential part of every company. Whenever there are barriers and impediments to change, the company loses a lot and wastes more resources. Ranieri (2017) connotes that there is evidence of companies which have suffered significant intricacy in their ability to effect change due to the presence of external service provider.
Increased Risks and Unfavorable Environment of Outsourcing Business Functions
Apparently, outsourcing business functions may not be always a smooth process. There are major risks that are associated with having external professionals sharing the same space with the company’s staff(Tayauova, 2012). For instance, whenever a professional from the external service provider commits an offense within the company, it is expected that he/she be fired or replaced by his bosses (NIBusiness, n.d.). However, this may not be case especially where the external service provider does not have capacity to immediately replace such an employee. Such problems may make the working atmosphere and environment uncomfortable and unfavorable for business operations.
Another major risk associated with such a scenario is the unprecedented and unanticipated departure of the external service provider. According to Riggins, (2017) there have been cases where external service providers run out of business, go bankrupt, decide to end their operations prematurely, or simply fall out with the outsourcing company without warning. Always the outsourcing company will negative repercussions such as delayed outcomes, stalled operations, inefficient service delivery, incomplete tasks and several other downsides(Global Outsourcing Agency, n.d.; Bryce and Useem, 1998). On such a level, it becomes a major challenge for the outsourcing company to hire the services of another external service provider who may not be readily available.
Hidden Costs associated with Outsourcing
Arguably, outsourcing does not only reduce costs within the company. There are instances where outsourcing has been blamed for increased operational costs. Lack of cost-effectiveness stems from factors such as the time and cost spend getting into a contractual agreement with an external service provider (Eisele, 1994). The contract signing also involves legal costs because it has to be bound within both company and civil law. A lawyer has to be present during the negotiations and the signing of the agreement.NIBusiness, (n.d.)argues that given that the external service provider is experienced and evidently signed such contracts before, the outsourcing companies will be at the disadvantage. The outsourcing company must also procure necessary equipment, materials and resources that the external service provider needs to complete the outsourced functions (Tayauova, 2012). For instance, if a company outsources cleaning services, it has to purchase all the necessary materials needed to facilitate cleaning.
Conclusion
Evidently, there is significant scholarly attention on the topic of outsourcing business functions despite the concept having a narrow scope. From this literature review, it is evident that business outsourcing is a vital aspect of every business. Being significant, managers are advised to ensure that they assess the benefits and demerits of outsourcing business functions before they engage in the process.Nevertheless, there is no consensus among scholars on the limitations of outsourcing business functions. Authors differ in how they conceive the downsides of outsourcing business functions. Moreover, from this literature review, it is evident that the benefits of outsourcing business functions have not been exhaustively studied. They are coherent and clear but seem not to appeal to all forms of business outsourcing. The present study seeks to fill these two gaps by establishing the benefits and downsides of business outsourcing.
References
Bounfour, A. (1999). Is Outsourcing of Intangibles a Real Source of Competitive Advantage?International Journal of Applied Quality Management, 2(2): 127-51.
Bryce, D.J. and Useem, M. (1998).The Impact of Corporate Outsourcing on Company Value.European Management Journal, 16(6): 635-43.
Bucki, J. (2017). 7 Ways Outsourcing Can Improve Your Business. The Balance. Retrieved from https://www.thebalance.com/top-outsourcing-advantages-2533765
Dad, M. A., &Iqbal, Z., (2013). Outsourcing: A Review of Trends, Winners & Losers and Future Directions. International Journal of Business and Social Science, 4(8): 91-107
Eisele, J. (1994). Opting For Outsourcing: Both Sides of the Story.Buildings, 88(7): 48-9.
Frank, A. L. Y., (1998). The Pros and Cons of IT Outsourcing: Panacea or Poison? Journal of Accountancy, June 1 1998.
Global Outsourcing Agency.(n.d.).Advantages and Disadvantages of Outsourcing. Retrieved from www.globaloutsourcingagency.com/adv.html
NIBusiness, (n.d.).Outsourcing: Advantages and Disadvantages of Outsourcing. Retrieved from www.nibusinessinfo.co.uk/content/advantages-and-disadvantages-outsourcing
Raineri, S. (2017). Top Outsourcing Disadvantages. The Balance. Retrieved from https://www.thebalance.com/top-outsourcing-disadvantages-2533777
Riggins, N., (2017). 20 Advantages and Disadvantages of Outsourcing from your Small Business. Retrieved from www.smallbiztrends.com/2017/02/advantages-and-disadvantages-of-outsourcing.html
Tayauova, G., (2012). Advantages and Disadvantages of Outsourcing: Analysis of Outsourcing Practices of Kazakhstan Banks. Procedia-Social and Behavioral Sciences, 41(2012): 188-195.
Appendix
Appendix One: Breakdown of the Advantages and Disadvantages of Outsourcing Business Functions
| Benefits of Outsourcing Business Functions |
Downsides of Outsourcing Business Functions |
| i. Facilitates an increased focus on the core process and functions of operations |
i. With outsourcing, there is an increased threat of security and confidentiality of company data |
| ii. Outsourcing helps save or reduce operational and logistical costs |
ii. With outsourcing, there is a potential loss of managerial control (over quality) |
| iii. Outsourcing leads to increased efficiency and quality of outcomes |
iii. Outsourcing may increase the inflexibility to change |
| iv. Enhances risk-sharing, flexibility and customer satisfaction |
iv. There are increased risks and unfavorable environment of outsourcing business functions |
|
v. There are several hidden costs associated with outsourcing |