Advantages and Disadvantages of Outsourcing

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  • Created by: me.com
  • Created on: 22-03-17 09:32
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  • Outsourcing
    • Advantages
      • Businesses are able to react to changes in demand more quickly is they have access to other firms
        • To increase capacity = increase supply to match demand without the need to increase the size of the factory
        • To reduce supply to match a fall demand (reducing the amount of work its outsourcing) without making changes to the factory size
      • Outsourcing providers may be more specialised
      • Outsourcing allows the firms to focus on its core business
      • Non-standard orders can be outsourced so the business gets the order, but then doesn't suffer with the destruction with dealing with it
    • Disadvantages
      • Not in direct control of quality, so if the outsource provider is unreliable it could negatively affect the company
      • Excessive outsourcing can impact on R&D and the company's ability to make changes
      • Cost of outsourcing is likely to be higher than producing in-house
      • May need to give confidential information to supplier, if the ideas are stolen the company could lose its competitive advantage

Comments

Russell

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Thank you for providing these examples of the advantages and disadvantages of outsourcing. This was my first time thinking about using these services for software development and I realized that it suits me. All that's left is to find a decent company to do my project.

JonyClaber

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Thank you

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