There are many reasons to pursue business process outsourcing and project procur

Question

There are many reasons to pursue business process outsourcing and project procurement, including flexibility, improving methodologies, and increasing productivity. Taking into consideration budget, scope, schedule, and risk, what are some of the other reasons to contract part or all of a project or business process? What are some of the drawbacks to outsourcing? Again, consider this question from the budget, scope, schedule, and risk standpoint. Please remember to answer all components of the question.

Explanation / Answer

Answer: The reasons behind the outsoursing decisions apart from what are mentioned above are:

1. Outsourcing increases the company's focus: This happens as the company can outsource its non core functions to the specialised company and then focus on its core area of speciality that is more important for them to create value for its stakeholders.

2. Gaining access to world class capabilities: Outsocrving helps the company to get in touch with the new technologies across the borders.

3. Risk get diversified: The risk of the business gets shared with the partner in the outsourcing.

Drawbacks of outsourcing:

1. Company loses its control over its business as it outsources its main functions to some other company. The outsourcing company may not have the same mission and objectives as your firm may have and thats is the reason behind loss of managerial control.

2. Some hidden cost may also prop up and may not be included in the contract itself.

3. The security of the compnay gets compromised as it gives away the control of its one of the division to another company.

4. The outsourcing company will be motivated by profit. Since the contract will fix the price, the only way for them to increase profit will be to decrease expenses.

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