OUTSOURCING

Presented by IFTAKER FAHIM

 Outsourcing is the procuring of services from an
outside supplier/manufacturer in order to cut down
the cost.
 This can be done by arranging a contract with the
supplier.
 Successful outsourcing requires a strong
understanding of the organization’s capabilities and
future direction.
 Examples of outsourcing: manufacturing of
components, computer programming service,
transportation of products, benefits and compensation
planning
Principles of Outsourcing:
 Focus on core activities: it eliminates the distractions of the
expansion of the companies that consumes the resource of the core
activities.
 Cost and Efficiency savings: back-office stress could be
eliminated by outsourcing companies
 Reduced Overhead: Overhead cost of back-office function are
extremely high. It can be reduced by outsourcing
 Operational Growth: Operations whose costs are running out of
control must be maintained by outsourcing
 Staffing Flexibility: Operations which has to be done in a fixed
season in a year can be done by outsourcing.
Disadvantage of Outsourcing
 Loss of Managerial Control: The managerial control will belong
to belong to another company which may not follow the same
standard and mission as the main company does
 Hidden Costs: The outsourcing companies are the one who writes
the contract which cover every necessary details about the services
they will provide. Also there is a legal fees to retain a lawyer to review
the contracts.
 Quality problems: The outsourcing company will always want to
make extra profit as the payment with the buyer has already been
fixed. In order to do that they might reduce the quality of the product.
 Tied to financial-banking with another company: Since
the companies product is on the hand of the outsourcing companies,
so if the outsourcing companies goes on bankrupt then it would be
huge loss for the main company as well.
Conclusion
The life-blood of any business is the
information that keeps it running. So when
dealing with outsourcing company, a
company must have to know every history
of the outsourcing company. If a company
can analyse all the possible risks and losses
then all the disadvantage can be overcome.
Any Questions?

Thank you!