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1) What is Outsourcing?
There are a number of definitions, but essentially outsourcing is the passing of service provision or production to another internal or external party.
2) What are the benefits of outsourcing?
The benefits
of outsourcing are wide and varied, and tend to be specific to individual
situations. However, generally, the following are usaully amongst them:
• The ability to concentrate on the businesses own core functions
• Delivery of lower costs due to economies of scale
• The potential freeing of resources for other purposes and tasts
• Higher quality service delivery due to the focus of the supplier
• Less dependency upon internal resources
• Increased flexibility to meet changing business and commercial
conditions
• Tighter control of budget
• Likelihood of lower ongoing investment required in internal infrastructure
• Potential acquisition of innovative ideas
• Potential improvement of credibility due to association with superior
providers
• Potential new market access through the supplier’s network
• Potential cash influx resulting from transfer of assets to the
new provider
• Possible lower ongoing internal infrastructure investment required
3) When considering transition issues, what factors broadly need to be considered?
In identifying the
possible transition issues, it is advisable to concentrate on the factors
of production and how the internal unit fits into the organization:
• People
• Facilities (space and related services)
• Equipment
• Hardware/software
• Third-party contracts
• Processes, functions, and activities, processing inputs and producing
outputs
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