Companies have been outsourcing functions such as customer service, payroll, cal

Question

Companies have been outsourcing functions such as customer service, payroll, call centers, and some other functions for years. Some of these are outsourced to contractors, some to other companies. Some outsourcing sends work overseas, while others us US based companies to provide services. Consumers, management, and employees often have differing opinions on whether outsourcing is beneficial.

1. Why would a company outsource a business function, such as customer service? What are the risks?

2. Why would a company outsource a human resources function, such as benefits administration or recruitment? What are the risks?

3. What is your opinion of outsourcing work, in general? Do you view it as positive, negative, or neutral? Why?

Explanation / Answer

1 Ans:- The companies oursource business function like customer service due to following reasons:-

a). The company is not having expertise in customer service.

b). It is costly for company to set up a customer service function.

c). The outsource company has very good reputation of customer service.

There are also certain risks associated like brand image of company would be damaged if outsourced company has made any mistake. Sometimes the outsourced function might turn costlier than what it would have been, if done by company itself.

2) Ans:- A company outsource a human resources function, such as benefits administration or recruitment because:-

a). The company would not be having expertise in administration and recruitment.

b). It is costly for company to set up a human resource function.

c). The outsource company has very good reputation of administration and recruitment.

The risk of outsourcing human resorce function could be like recruitment of undeserving candidates or recruitment of relatives of outsourced company. There might also be mismanagement in on-boarding process of relevant candidates.

3) Ans:- The outsourcing can turn positive and profitable for company if certain aspects are taken into consideration before outsourcing the function. The past history of outsorced company, education of employees of outsourced company, managment of outsourced company etc. There has been numerous examples wherein fincancial services firms has taken advantage of IT companies. Lot of IT companies have set up infrastructure under companies which are not having expertise of technology.

Overall we can say that the outsourcing of function should only be done if company is not having expertise in that domain, it is profitable for company and outsourced company is a established brand.

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