Outsourcing:
- refers to subcontracting a process or an activity of the organisation, to an outside party for a fee
- the outside party usually specialises in conducting such activity
- the main objective of outsourcing is proper allocation of resources and to obtain products or services at a cheaper rate than producing these goods / services in-house
- can be full or partial
Full outsourcing:
- involves finding an external organisation to assist in performing critical as well as non-critical tasks, saving the organisation time, money and effort
Partial outsourcing:
- involves outsourcing only a part of the process
Advantages:
- cost reduction
- concentration on core business areas
- technical expertise
- increased productivity
Disadvantages:
- sub-standard work
- no control over the staff of the service organisation
- leakage of confidential data
- dependence on an outside party for technical matters
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