T9

4. Compare the benefits and risks of strategic outsourcing.

Benefits
• Low cost
- Reduce the cost of training the employee and the salary to do the
specifics jobs by hiring outsourcing to complete the specific job.
• Enhance differentiation
- When the deal with other company that might have higher technology
and specialist
- The outsource company have the speciality of their own and higher
technology compared to the main company which does not have the
efficient as the outsource company.
• Focus on core business
- Focus of the things that they are expert in. They do not have to think
about other processes and function.

Risks
• Holdup
- Risk that a company will become too dependent upon the specialist
provider of an outsourced activity.
- Without the outsource company the main company cannot do the job.
• Increase the competition
- Building of an industry-wide resource that lowers the barriers to entry in
that industry.
- The outsource company will learn the technology, trade secret and system
from the main company and maybe one day will become a competitor.
• Loss the information and forfeited learning opportunities
- The employee of the main company would not be able to learn how to do
the process or the function when the company hiring the outsource
company for doing it.