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List Pros and Cons of Outsourcing

Table of Contents

  • Executive Summary
  • Abstract
  • Introduction
  • Outsourcing
  • Pros of Outsourcing
    • Cost Savings
    • Flexibility
    • Refocusing on Core Competency
    • Specialised Expertise
    • Added Value to the Organization
  • Cons of Outsourcing
    • Morale
    • Loss of Control, Continuity, and Cooperation
    • Loss of Innovation, Creativity, and Flexibility
  • Conclusion and Recommendation
  • References

 Executive Summary

Outsourcing is a contractual relationship in which an organisation hires a third party, usually an external vendor or contractor, to perform and manage one or more internal functions previously done in-house to maximise service, optimize expertise, minimize cost and maintain, if not improve, quality (Blouin and Brent 1999, 18). Outsourcing has become a major management activity in recent years (Bromage, 2000). Due to changing business environments organisation needs to adopt measures to lead to a better quality of services and greater flexibility in management. There are several reasons why many firms utilize outsourcing of their services, such as enhanced efficiency, cost reductions, increased flexibility and focus on core competencies. Outsourcing offers many advantages, albeit clearly with many caveats. The loss of skilled, expert staff is expected with outsourcing. Certain outsourcing risks include loss of innovation, ingenuity and versatility and loss of control, consistency, and cooperation.


Outsourcing allows the organization to reduce costs and concentrate on its core competences and to improve its activities. Although outsourcing is an attractive strategy bounded by appealing benefits, it also contains some significant risks. However, this risk associated with outsourcing can be controlled and minimized if executed effectively. The immediate challenge facing organizations is how to make an informed offshore outsourcing decision that maximizes the benefits while reducing the risks. An important way to achieve the aim is to ask into how decision-makers perceive and determine the factors that influence their decision to outsource offshore.

List Pros and Cons of Outsourcing

Outsourcing with Pros and Cons

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