Outsourcing of the Business Functions-Free-Samples-Myassignment

Question: Discuss about the Advantages and Disadvantages of Outsourcing Business Functions. Answer: Introduction The report is prepared to discuss about outsourcing the business functions considering its advantages and disadvantages related to it. The business process and functions outsourcing means management of the internal business functions such as human resource management, financial and accounting, front office outsourcing along with providing better customer related services to enhance the efficiency of the organization. Few of the benefits of outsourcing the business functions are Better control over the capita costs, reduce costs of labor management, focus on the core business functions and processes and lesser amounts of risks faced in business (Solakivi, Tyli and Ojala 2013). Project objective The main objective of the report is to evaluate the advantages and disadvantages of outsourcing the business functions. Project scope There is quite a good scope for conducting the project, because a large numbers of benefits as well as drawbacks are obtained by outsourcing the business functions. The business functions outsourcing could not only manage the business operations and processes with the involvement of a third party service provider, but could also facilitate the manufacturing and production processes along with outsourcing the larger segments of the supply chains. The internal operations would include human resource management, finance and accounting activities along with customer related services to ensure effective business operations and fulfillment of the needs and expectations of the customers too (Willcocks and Cullen 2013). The outsourcing of the business functions could allow for knowledge process outsourcing, at the same time manage legal process outsourcing for combining a wide pool of talent, and maintain workforce efficiency. There is immense scope for managing the project because of some of the major benefits including the enhancement in companys flexibility and direct control over the quality of products and services offered by the business organizations. The services offered through business functions outsourcing are by the vendors on a fee-for-service basis, which allows for increasing the organizations flexibility and even transforming the fixed costs into the variable costs. By transforming the fixed costs into variable costs, it would become easy for the organizations to respond to the changes in capacity of the organization and increase the ability not to spend much on the assets (Gurung and Prater 2017). The companies could focus on the core competencies, which would further create enough scopes and opportunities for meeting the demands of the bureaucratic restraints and develop the core business processes with much ease and effectiveness. This would create more opportunities for the organization to develop positive relationships with the customers, furthermore maintain product leadership and operational excellence to gain competitive advantage in business. It would speed up the business processes and make effective utilization of the supply chains to enhance the efficacy of the manufacturing and production processes too (Brown, Sturgeon and Cole 2013). The premature internal transition related issues would be overcome, which could enhance the flexibility of the organization and maintain steadiness in the organizational life cycle, furthermore obtain the speed and agility to become successful in terms of profitability and competitive advantage (Caruth, Haden and Caruth 2013). Outsourcing the business functions The outsourcing of business functions is mainly done for reducing the costs of labor management and improving the management and allocation of resources properly for ensuring better manufacturing and production processes. Dolgui and Proth (2013) stated that the outsourcing of the business functions could also allow for directing the focus on the core competencies as well as handle the resources for proper management of tasks at the organizations. The business organizations mainly outsource the business functions for controlling the operational costs and improving the company focus on obtaining the best class facilities and managing the internal resources properly (Dolgui and Proth 2013). The maximization of the use of external resources would be possible, which would increase the chances of streamlining the business operations and share the tasks in order to lessen up the time consumption for the project undertaken. There are various requirements for successful outsourcing of the business functions and few of the major areas that should be focused on could be the clarification of business goals and objectives, strategic vision and plan, selecting the right vendor and making sure to manage the vendor agreement plan properly. There should be open communication and proper leadership skills present among the manager of the organization to handle the critical issues and make necessary financial adjustments. With the help of proper leadership support, it would be easy to outsource the business functions as well as the human resources, i.e., the employees, promote effective communication and teamwork and furthermore achieve the business objectives (Iqbal and Dad 2013). For example, Woolworths Australia has focused the requirements of open communication to manage changes considering the outsourcing of functions, which is considered as fundamental to the success of the outsourcing program and accomplishment of business goals and objectives. The senior management of Woolworths focused on formulating the goals and objectives of outsourcing and communicated the processes properly to ensure proper exchange and flow of information along with successful allocation of resources too. It could also be found that Woolworths a large number of staffs were transitioned to the employment with WiPro, which assisted in the assigning and deployment at the company and even eased down the management roles and responsibilities (Liu and Wang 2014). The roles and responsibilities were shifted to an outsider playing the management role, which further facilitated betterment of decision making, management of resources, both human resources and financial resources with ease. The company even was found to outsource the truck driver jobs to ensure aligning the transport services with the other retail stores in Australia. This would not only enhance the process of distribution but would also allow the company to generate more revenue in business (Sivakumar, Kannan and Murugesan 2015). Advantages of outsourcing the business functions One of the major advantages of outsourcing the business operations could be the speeding up of business operations and enhancing the flexibility of the organizations. With the outsourcing of business functions and systems, many large companies have managed to retain the agility and speed to improve the business operations efficiency and even reduced the costs of business operations largely. This has not only focused on the key drivers of value, but has also enabled successful; management of customers relationships and brought operational excellence (Butler and Callahan 2014). The companies could become less constrained by the large amounts of expenses made for managing the human resources and also for buying the equipments and machineries required to make the manufacturing and production processes successfully. Through business process and functions outsourcing, it has become easy for the companies to leverage the technology stacks and even implemented the right quality improvement t echniques for maintaining production of good quality products and services. According to various evidences, it could be understood that the four major functions to be considered while outsourcing the business functions including the marketing, sales, human resources and accounting (Pearce 2014). According to Han and Mithas (2013), to grow business, every company needs to manage the marketing approaches properly and for the purpose of developing a strong brand name and image, furthermore manage the lead generation initiatives and adopt social media strategies to market the products and services successfully. All these major components should contribute to the successful growth, development and momentum achieved by the company. Often it is seen that the marketing techniques incur a huge amounts of costs and the marketing professionals are also difficult to find out who can implement the marketing strategy properly without spending much on the resources that are outsourced (Han and Mithas 2013). Thus, it had been important to outsource the marketing functions to a reputed and established organization, which could be skilled and knowledgeable within the particular industry. By providing necessary samples and references, it would be much more convenient to outsource the business functions, furthermore meet the targets within the allotted time (Oshri, Kotlarsky and Willcocks 2015). For a physical store or retail outlet, there might be difficulties in outsourcing the sales functions. Though in case of B2B or business to business approach, the products and services could be sold properly by utilizing the right sales strategy with the utilization of sales resources that should be outsourced. The sales cycle could be outsourced by enabling proper control over the resources, furthermore would lessen up the complexities and business issues, without putting pressure much on the expenditures made by the organizations in Australia (Mukherjee, Gaur and Datta 2013). Human resource management is considered as one of the most important aspects of enhancing the business operations effectiveness and for bringing out the best productivity to increase the sales and profit level. Recruitment and selection of the skilled individuals could sometimes be quite complex during the growth and development of an organization. It would be essential for forming an internal human resource team for managing the functions of recruitment and selection and ensure that the costs of managing the human resources could be reduced to a certain extent. The outsourcing of the human resources could be done by finding a suitable recruitment agency who could work according to the needs and preferences of the organization and access the databases consisting of the most suitable and qualified candidates prior to the recruitment and selection processes (Sturgeon et al. 2013). The accounting and financial management are other important aspects for making proper budgetary plan and ensuring that the costs can be kept under control. The outsourcing of accounting operations could be considered as a business functions outsourcing activity that would save a lot of time and money and reduce the chances of risks furthermore. A team comprising of experts should be selected from a reputed and established organization who could deliver much more experience and skills. It could be more scalable as well as extract the best skills, knowledge and expertise of the expert team to obtain the resources properly and technology at disposal (Schniederjans, Schniederjans and Schniederjans 2015). The streamlining of processes would be possible along with speeding up the processes and reduced risks and errors experienced all throughout. Therefore, these could be the major advantages of outsourcing the business functions and all these activities would even save a considerable amoun t of money as well as time. There would be no such complexities arising regarding the absorption of benefits of the employees and better scopes would appear for gaining the best quality resources by outsourcing the business functions (Albertoni and Elia 2014). The business functions outsourcing had allowed the contracting of business functions, operations and processes to the third party providers to reduce the costs of operations and even allowed the companies to gain competitive advantage in business. Outsourcing a particular task, job or even the functions and system could be beneficial as well as harmful for the business organizations and so careful consideration of the benefits or drawbacks that might be obtained should be assessed at first (Hill, Jones and Schilling 2014). The major advantages of outsourcing the business functions could be improved focus on the core business activities and even analyze the strengths of the employees through monitoring their performances. This would allow the employees to understand their own roles and responsibilities as well as work as an unit to develop strategies for sustaining in the future (Morschett, Schramm-Klein and Zentes 2015). Other benefits included the increased effectiveness of business operations, which had enhanced the ability of the organizations to become more productive and profitable through delivery of the best quality products and services. The costs were kept under control for organizations like JB Hi Fi, Woolworths and Myer by releasing the capital to make investments in various other business areas. This would allow for making necessary changes in those areas and improve those to ensure successful business functioning and better reach to its customers and resources (Johnson 2014). The business functions or processes outsourcing had also lead to the enhanced ability of accessing the resources, capabilities and facilities that might not have been accessible previously by these companies. Leveraging the knowledge, skills and expertise is also considered as another major advantage of outsourcing the business functions, which can enable the business organization to provide better quality products and services to its customers, furthermore achieve competitive advantage within the business environment (Klimovets 2015). Disadvantages of outsourcing the business functions Though there could be various benefits of outsourcing the business functions and systems, still there had been few drawbacks or disadvantages as well. He major disadvantages of business functions outsourcing cold be the lack of timely service delivery, lack of security and confidentiality, less flexible business operations, difficulties in managing the resources sometimes and even the instability, which often might result in degrading the business performance. Though outsourcing the business functions could result in reducing costs of operations and better management of supply chain and resources, still there might be various challenges associated with the hidden costs and layoffs of the local employees. To manage the offshore relationships, there might also be complexities related to the different culture, languages and time zones as well. Sometimes, the outsourcing of business functions could lead to lack of control over the business operations and processes and even problems might arise regarding the quality and turnaround time (Mathur Jain and Khurana 2013). The expected performance standards might not be achieved as well as the human resources should be affected as well. Other major disadvantages of outsourcing business functions could be the exposure of confidential data and information. With the business outsourcing, the important data and information were also transferred to the third party vendors, which could be exposed and fall in wrong hands. The payroll, selection and recruitment processes when outsourced, could lead to the emergence of certain risks such as exposing the confidential data and information to the third party and it could even cost a lot of money for the business organizations to overcome any issues faced associated with it. The deliverables might not be synchronized properly, which could be another major problem because the right third party vendor or partner should not be chosen (Solakivi, Tyli and Ojala 2013). This not only hinders the manufacturing and production processes, but also can create problems regarding late delivery of products and services to its customers, poor quality products and not deploying the roles and res ponsibilities of the workers properly within the workplace of the Australian business organizations. There were lots of hidden costs which often were ignored including signing of a contact related to the management of business across the international boundaries, which could cause serious threats in business and create risks of business loss and failure (Willcocks and Cullen 2013). Lack of focus on the customers needs and preferences should be considered as another major disadvantage faced by the companies while outsourcing the business functions. The third party vendors often face difficulties in focusing the tasks that were needed to be performed by the organization, due to which, the customers needs and expectations remain unfulfilled, which could decline the sales revenue and prevent achieving the business objectives appropriately (Gurung and Prater 2017). By assessing all these advantages and disadvantages of outsourcing, it could be understood that it would be important to understand the significance of the tasks and then take into consideration the benefits and drawbacks that might be achieved. It could not only allow the business to remain profitable through business process and functions outsourcing, but would also improve the business performance (Brown, Sturgeon and Cole 2013). Conclusion From the report, it could be understood that outsourcing of business functions could bring both advantages and disadvantages for the businesses all over Australia. Outsourcing the business functions was mainly done by the business organizations to reduce the cost of operations, enhance the supply chain operations efficiency and ensure better flexibility, swiftness and enhanced skills and expertise management. It could be achieved by recruiting and selecting the right candidates as part of the organization, which could streamline the processes at a faster rate and deliver the best quality output. It though must be kept into consideration hat these activities could cost huge amount of money, which should be overcome by handling the functions to a third party vendors and here the outsourcing could be beneficial. The disadvantages were though experienced as well such as lack of consistency if focusing on the customers needs and requirements, lack of synchronizing the deliverables properl y and risks associated with the exposure of private or confidential data and information. References Albertoni, F. and Elia, S., 2014. 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