Contracting With Another Company, Usually In A Low-Cost Country Abroad, To Have It Perform A Work Activity The Organization Previously Performed Itself Is Known As

Contracting With Another Company, Usually In A Low-Cost Country Abroad, To Have It Perform A Work Activity The Organization Previously Performed Itself Is Known As A. integrating. B. telecommuting. C. outsourcing. D. insourcing.

Definition Of Outsourcing With Its Advantages (Merits) And Disadvantages (Demerits) In Management

The correct option of this multiple choice question is C, as outsourcing is a management strategy which is adopted to hire or contract with individuals or other companies, usually abroad but can be made with outside source (outsiders) within the country, to perform specific tasks, activities, or to operate the business operations instead of doing by itself in order to reduce the cost of production and operation to increase efficiency to get desired results. In this way, the size of hierarchy of management decreases and as a result, the complexity among team management is also decreased i.e., as they now better know what are their responsibilities and rights within the levels of management.

Why An Organization Need Outsourcing?

Simply, the organization wants to focus on its core competencies, which are unique specific skills, knowledge, experiences, expertise, quality, etc., which give it an advantage over its competitors, rather than utilizing resources on specific internal processes, operations, customer services, IT system, etc., the company can use that time in creating something new. So, it mainly focuses on its core competencies to improve efficiency of resources to achieve set goals.

By developing new unique product or service, the organization gain competitive edge which helps it to achieve organizational objectives and goals.

Advantages of Outsourcing

1. Minimization Of Internal Costs

A company can minimize its cost of operations, internal processes, etc., and increase efficiency as third-part operates specific their business operations, take control of internal processes, providing customer care service, manage IT technology and computer system with lower costs, especially in developing countries. The company does not need to select, recruit and hire new employees, train them as these are outsourced to another company and the company does not need to use its Human Resources (HR) and Financial Resources on such activities and avoid increasing costs and saves time. Ultimately, the company can gain competitive advantage over its competitors by utilizing more resources in creating new things or improve the quality of existing products or services.

2. Hiring Skillful Third-Party Service Providers

The company hires highly skillful third-party service providers who have specialized skill, knowledge, talent and expertise to perform these specific activities and the company saves its time in performing such activities by itself. So, the company has external skillful and expertise individuals or third-part service providers globally which increase the performance of the organization efficiently and effectively.

Disadvantages of Outsourcing

1. Dissatisfactions of Workforce

It discourages already established workforce of the organization who performed well in the organization. Also new skillful and talented employees to operate business operation professionally are not willing to get job in such organization due to lack of job security i.e., they can be eliminated from working any time.

2. Less Control Over Operations

A company loses its control over its business operations. It just evaluates the processes but not able to manage during operations which can be frustrated for management of the company not to handle during the process as it has to totally relies on external service providing company.

The other options A, B and D of this mcq are totally incorrect choices here.

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