Impact of Outsourcing in Performance - MyAssignmenthelp.com

Question: Write about theImpact of Outsourcing in Organisational Performance. Answer: Problem Statement The concept of outsourcing is a recent trend which has created a significant impact on the world of business. Outsourcing has played a major role in helping the business establishments to reduce their business expenses and as a result business establishments have been able to maximise their revenues and profits in the market. The concept of outsourcing mainly involves transferring their unimportant work or activity (which could have been performed in-house) to any third party organisation in the market at a lower cost. When an organisation outsources their work to any third party organisation, they become responsible for performing certain task like manufacturing or providing certain services to the customers in the market on behalf of that organisation (Yang et al., 2007). This enables an organisation to save on their resources and they are able to allocate their resources on the important tasks which occupy a high place on their list of priorities. Outsourcing plays a very important role in influencing the organisational productivity of a company and this is the major reason why it has become such a popular concept with the business establishments around the globe. An organisation decides to outsource their business activities based on their cost constraints. If an organisation finds that some aspects of their business are incurring more cost or expenses for the organisation in the market, then they can outsource those activities and functionalities to other service providers in the market. However, the process of outsourcing is not very simple and it comes with its own set of challenges (Handley Benton, 2009). Before outsourcing their activities an organisation needs to identify trustworthy and reputed service providers who have a proven track record of providing quality services to the end users in the market. This will go a long way in determining the future growth and success of the organisation which is intending to outso urce some of their operational activities. This research will mainly focus on the evaluating the impact of outsourcing on the organisational performance. The research will try to indentify the challenges encountered by the business establishments during the process of outsourcing and how they would be able to tackle those challenges in an effective manner in order to ensure a successful outsourcing process which would contribute towards their organisational productivity (Geis, 2006). The researcher has undertaken this research in order to evaluate the different aspects of outsourcing and how they are contributing towards the growth and success of an organisation. Research Aim, Objectives and Questions Research Aims The aim of this research is to evaluate the impact of outsourcing on the organisational performance and provide recommendations regarding how an organisation will be able to ensure a successful outsourcing process which would enable them to produce successful outcomes in their business. Research Objectives 1) To assess the importance of outsourcing from an organisational context. 2) To evaluate the impact of outsourcing on the organisational performance. 3) To recommend the measures through which an organisation will be able to successfully outsource their business operations to other third party service providers. Research Questions 1) What is the importance of outsourcing? 2) How outsourcing can help a business establishment to realise their business goals and objectives in the market? 3) What measures need to be undertaken by an organisation in order to ensure a successful outsourcing process? Justification and Potential Output of the Research Project Importance of Outsourcing for a Business Outsourcing is a recent practice which is fast gaining popularity and acceptance among the majority of the big business establishments of the world. With the process of outsourcing, an organisation is able to reduce the cost associated with their business activities in the market by transferring a portion of their functioning activities to another service provider in the market. According to Geis, (2006) business establishments are able to capitalise on the market expertise of the third party service providers and get their work done at a much lower cost. Thus, an organisation is able to guarantee their future growth and sustainability in the market by reducing the cost associated with their different business process. An example of outsourcing is when a business establishment decides to buy certain goods from third parties at affordable prices instead of manufacturing those goods in-house which would have been much more costly proposition for the organisation. According to Lacity et al., (2011) outsourcing is playing an essential role in helping todays contemporary business entities to focus on their core activities which are critical for their organisational success. It enables them to concentrate on the main functionalities of their business which are much more essential from the organisational context. This facilitates them in improving their organisational efficiency and performance and thus they are able to create a competitive edge in their respective industry sector. The process of outsourcing plays an instrumental role in streamlining the business processes and activities of a corporate entity which would go a long way in facilitating better communication and coordination resulting in improved cohesion between the diverse departments within the organisation (Chatzoglou Sarigiannidis, 2009). Business establishments are able to reduce the cost associated with labour and they are able to obtain the same output without investing their resources. This helps to increase the turnaround times which helps the business entity to tackle the industry competition in an effective manner. They are able to maximise their organisational productivity resulting in the successful realisation of their business objectives. However, outsourcing also has its own shortcomings and drawbacks. By outsourcing their business activities to another organisation, an organisation provides information pertaining to their business to another party. This can invariably compromise the security of the sensitive and confidential information which are being utilised within an organisation (Handley Benton, 2009). Outsourcing of business activities involves signing of contractual agreements with third party business entities and this is often a very time consuming legal process which can cause delay in an organisation. Impact of Outsourcing on Organisational Performance Outsourcing is the latest business trend which is widely gaining prominence and popularity among the global corporate entities. Organisations these days are becoming more and more conscious about the cost without compromising on the service quality that is being offered to their customers in the market. This is the main reason why they are increasing outsourcing their non-core business operations and activities to destinations like India where there is a wide availability of cheap and skilled manpower (Karabulut et al., 2007). This enables the global corporate to save on their manpower and labour costs which would help them to increase the revenues and profits from their business. Corporate entities would be better equipped to capitalise on the expertise of their third party vendors in order to increase their productivity in the respective industry sector. They are able to compete in an effective manner with their business rivals which would ultimately provide them with a competitive edge in the market (Ghodeswar Vaidyanathan, 2008). Outsourcing provides a wide variety of benefits to an organisation which enables an organisation to sustain their future growth and success in the market. These benefits have been discussed below: 1) Outsourcing helps an organisation to increase their business efficiency by gaining access to world class business capabilities. 2) Outsourcing enables an organisation to focus on the core aspects of their business by allocating their internal resources in an effective manner. 3) Outsourcing helps an organisation to streamline their business operations in the market and thus they are able to improve their business performance and productivity in the market (Weidenbaum, 2005). 4) Outsourcing enables an organisation to maximise the use of their external resources. 5) Outsourcing helps an organisation to reduce and control their operating expenses in an effective manner by capitalising on the infrastructure, technology and expertise of their vendors. 6) Organisations are able to share the market risks with their vendors and this helps in reducing the obligations in the market (Mani et al., 2010). 7) Outsourcing will play a significant role in ensuring the delivery of improved quality of products and services to the end users thereby creating value proposition for their customers. Understanding the measures or steps through which an organisation will be able to ensure a successful outsourcing process Outsourcing is a very important aspect of an organisation which requires a lot of strategic planning and decision making. It is a long term business decision which has both positive as well as negative consequences for an organisation. Thus, it is imperative for any business establishment to take a cautious and calculated approach towards outsourcing. During the initial days head count reduction was the main purpose of outsourcing. However, in todays corporate world outsourcing has a different purpose altogether (Chatzoglou Sarigiannidis, 2009). Outsourcing provides a strategic advantage to an organisation by enabling them to carry out value proposition in their business and this enables and organisation to capitalise on its strengths and core-competencies. There are many factors which play a critical role in determining the success of the outsourcing activities which are being carried out by an organisation. These have been discussed below: 1) An organisation must have total clarity regarding their business goals and objectives in the market. 2) An organisation must have a strategic vision and plan regarding how their outsourcing activities need to be carried out in the market. They must identify the activities which needs to be outsourced and how it will enable them to maximise their profits and revenues in the market. 3) Selecting a vendor is another important task which must be carried out carefully and with a lot of introspection. Organisations must select a trustworthy vendor or service provider who has a proven track record of addressing the business needs and requirements of their clients. This is going to play a very important role in determining the success of the outsourcing activities which have been planned by the organisation (Nadkarni Herrmann, 2010). 4) Relationship management is another aspect which must be emphasised by an organisation. Organisations need to ensure a strong relationship with their vendors to whom they have outsourced their work and this will ensure better understanding and coordination between the organisation and their vendor. This will play a vital role in helping the organisation to maximise their business productivity in the market. 5) Organisations must undertake proper contractual agreements with their vendors in the market and this will enable them to ensure the smooth continuity of their business operations in the market. 6) There needs to be proper involvement and support from the top leadership of an organisation and this would play a vital role in helping the organisation to outsource their business activities in a successful manner (Handley Benton, 2009). Conceptual Framework Research Methodology This section will provide a detailed discussion regarding the process through which the research has been conducted. The researcher will provide an effective justification about the different methods which were utilised by the researcher and why they have been preferred over the others. Research Design This is mixed research which utilises both primary qualitative and quantitative data. Survey questionnaire approach has been utilised by the researcher for gathering the quantitative data pertaining to the research. An open market survey was undertaken to collect the qualitative data. In this market survey, the respondents had been selected randomly from among the local population. These respondents were in turn presented with a series of questionnaires wherein the respondents had to provide their independent thoughts and opinions about the research topic. The primary qualitative data was gathered by organising a face to face interview with some of the market experts (Kothari, 2004). This will enable the researcher to evaluate the expert opinions and perceptions which are provided by the industry stalwarts. The primary data will play a very essential role in facilitating a precise and consistent information gathering process which will help in producing effective research outcomes. Type of Study The researcher has incorporated an exploratory research design in this particular research. An exploratory research is mainly undertaken when there are not adequate information available on a research topic and this compels the researcher to explore the topic in a detailed manner. Due to the lack of conclusive studies made regarding the research topic from previous researchers, the main focus of the researcher in this particular research was to develop and gain the necessary knowledge and insights regarding outsourcing and its impacts on organisational performance (Welman et al., 2005). This will enable the researcher to create a good platform for the future researchers wherein they would be able to carry out their future investigation regarding the research topic in a much more thorough and conclusive manner. Methods of Data Collection The researcher has utilised both qualitative and quantitative data in this research. An open market survey has been considered for the purpose of collection of primary quantitative data. This market survey will be open to the general population and they will be the main respondents in this survey. The respondents would be selected in a random probabilistic manner so as to ensure minimum discrepancy in the data collection process. Once the respondents are selected, a questionnaire would be given to them. The respondents would then be asked to give their thoughts and opinions on the research topic by asking them specific questions which are mentioned in that questionnaire. This probabilistic sampling strategy has proved instrumental in helping the researcher to minimise and mitigate any chances of bias and inconsistency in the process of data collection. This enabled the researcher to arrive at effective outcomes from their research (Denham, 2010). On the other hand, the qualitative da ta has been collected with the help of a convenience sampling strategy which is non-probabilistic in nature. The convenience sampling strategy played a very important role in helping the researcher to select the market experts who shared their precious feedbacks and views with the researcher and thereby enabled the researcher to gather vital information pertaining to the research topic. The independent variable in this research is outsourcing and the dependent variable is organisational performance. The fact that organisational performance can be largely impacted with the help of outsourcing makes it the dependent variable (Gatrell et al., 2012). The outsourcing strategy will eventually determine the growth and success of the organisation and so it is the independent variable. Measurement of the Relationship Between the Dependent and the Independent Variable The dependent variable will be evaluated with the help of graphs and tools which will enable us to understand the correlation between the dependent and the independent variable. In order to realise this objective, the researcher has utilised software tools like MS Excel which enabled them to carry out an accurate evaluation of the relationship which exist between the dependent and the independent variable in this research. Sampling Space The researcher has considered a sampling space of 55 market respondents in the quantitative data analysis. Additionally, the researcher has selected 3 market experts for the purpose of conducting the qualitative data analysis (Denham, 2010). Population Description The study will involve respondents from the general population. The general population will comprise the quantitative data in this research. The qualitative data will involve three industry experts who are having a good understanding regarding the research topic. Piloting A pilot study or a preliminary survey will be carried out by the researcher which will enable the researcher to identify the various problems associated with the research. This will make the researcher better equipped in tackling and solving all the problems that might arise in the future course of this research. The researcher will be able to understand the problems faced by the market respondents and this will enable the researcher to ensure that all the questions put across to them are clearly understood and comprehensible by them. To ensure the validity and reliability of the data, the researcher will personally design the questionnaire and supervise the data collection process (Welman et al., 2005). Research Ethics Ethics are a vital component of any research which ultimately determines whether a research is trustworthy and can be relied upon or not. Research ethics ultimately determines whether the facts and information stated in a research could be validated by experts. The researcher has taken every measure possible in order to keep the identity of the market respondents under wraps. The researcher has maintained the highest levels of data confidentiality which helped in preserving the privacy of the survey participants. The researcher has also made sure that no one was compelled or forced to take part in the survey. The views expressed by the respondents were their independent opinions and none of them were motivated to provide their views in this market survey (Eysenbach and Till, 2001). Research Limitations The main limitation which was faced by the researcher in this particular research was time constraint and budget constraint. The researcher did not have the necessary time and money at his disposal which is required to carry out an accurate and comprehensive research. This played a very important role in undermining the reliability of this research. This research would have been more successful and accurate if there had been more time and money available with the researcher at the time of the research (Kothari, 2004). Validation and Analysis The validity of a research depends on the sample size which has been incorporated and utilised in the research. The sample size incorporated in this research is very small and it cannot be considered to be a realistic and accurate reflection of the opinions and perceptions of the majority of the population (Kumar Phrommathed, 2005). However, in order to offset this discrepancy, the researcher has utilised statistical analysis with the help of MS Excel and this has enabled the researcher to carry out an accurate and reliable research from their end. Project Budget The researcher has carried out the entire research within a budget of $5000. The majority of this amount ($3000) was spent on the collection of the primary qualitative and quantitative data. The remaining amount of $2000 was spent on carrying out the other stages associated with the research. Research Timeline Activities Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Topic selection and its scope Identification of secondary data sources Preparation of research proposal Preparation of literature review Description of research methodology Preparing interview/survey, ethics form Collecting primary data Analysing data Comparing findings Conclusion and recommendations Finalising and submission References Denham, W. (2010). RESEARCH DESIGN AND RESEARCH PROPOSAL CHECKLISTS.Anthropology News, 20(4), pp.9-11. Gatrell, J., Bierly, G. and Jensen, R. (2012).Research design and proposal writing in spatial science. 1st ed. Dordrecht: Springer Science+Business Media B.V. Eysenbach, G. and Till, J. (2001). Ethical issues in qualitative research on internet communities. 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