RUNNING HEADER: OUTSOURCING

Outsourcing

Outsourcing

Introduction

Outsourcing is defined as the process of obtaining professional services from third party companies that will perform the same duties as in-house employees (Thompson, 2010). But outsourcing goes beyond just obtaining professional services, it is in fact the strategic use of outside resources (Faulhaber, 2005).There are many reasons an organization can take into account to consider outsourcing its functions. They can range from cost cutting measures, and improving IT services, to have the opportunity to tap into professionals with a higher level of expertise, that among other things can provide the rapid deployment of projects, or to outsource its transportation. As there are many good reasons for outsourcing, there are also drawbacks that in the end could have a detrimental effect on the organization. Therefore, there are many issues to consider.

Discussion

Outsourcing

According to an article written in 2005 by Thomas A. Faulhaber for Business Forum Online, he clearly points out that “outsourcing is the strategic use of outside resources to do tasks that would traditionally have been done in-house”. Therefore, Outsourcing needs to be view as a business “strategy” and not as a “get rid-off” idea. Being pressured by significant cost cutting measures, and at the same time improve services, an increase number of business executives believe functions should be outsourced to a third party organization (Kern & Johnson, 98). Therefore, organizations are asking if indeed they should outsource or not. Because one answer does not fit all businesses, they need to carefully considered outsourcing, and the first step is to conduct an analysis or Outsource Assessment to determine factors to outsource or not. The Outsource Assessment will provide valuable information such as where the organization is today, what is the state of their current operations, and where they are heading (McKinney, Enebo, and Ringman, 2005).

Organizations management feels that daily functions take too much efforts, important resources, and valuable time away from the core business goals, and by outsourcing some or all of their functions they can bring professional back to focus, and free-up valuable resources for core business goals and objectives to be met, which they believe are too valuable to the organization. Management also believes that expenditures are excessive, and are not providing a good return on investment, causing a call to reduce or control costs while improving functionality, and services. Another factor is the need to improve competitiveness. Organizations feel that they must remain competitive in order to not only survive in today's business environment, but to thrive. By outsourcing the functions, organizations can fulfill the need to gain access to world-class capabilities, and therefore improving services. It is becoming more difficult for organizations to find the highest level of expertise, since the demand for this service has increase in the last few years, and continues increasing, and with that, salaries demand have increased also, making some organizations less competitive in the market place.

There are factors that can also make management not to outsource their functions. One of these is the amount of technical knowledge transfer ...