Advantages And Disadvantages Of Outsourcing Business Functions - Research Methods And Data Collection Essay.

Question:

Discuss about the Advantages and Disadvantages of Outsourcing Business Functions.

The research report is based on the topic ‘Advantages and Disadvantages of Outsourcing Business Functions’ and this section of the report will contain the details of the research data collection and methods undertaken to complete the research. Outsourcing can be understood as the process where the business organisations transfers their business functions to other companies to get them completed by paying a fee or price for it. It means that the business functions can be completed by the outsiders rather than completing them by internal teams. This process is helpful in reducing costs of the business and brings expertise in the business functions (Pratap, 2014). The research will highlight the advantages and disadvantages of such process by collecting reliable data from different sources. This research report will also include the methods adopted for conducting the research.

The main objective of this research is to identify the advantages and disadvantages of outsourcing business functions. This objective will be achieved by going through various research papers, journal articles, books and many other web sources of information. The objective is to determine whether the businesses should outsource their business functions or not.

The scope of the research is wide as Outsourcing business functions is one of the significant decisions which is taken by the companies. Different reviews and opinions given by various authors will be discussed in order to know whether it is beneficial to outsource business functions or it is harmful for the privacy concerns of the company.

Outsourcing of business functions is a commonly used method nowadays by the business organisations. It is a significant tool for the companies through which the businesses can get their work done in reduced costs and with better perfection.  It helps in deriving the competitive advantage for the businesses. There are several advantages of outsourcing the business functions and also some of the disadvantages. Various authors have different opinion about the same.

It has been opined by Krstic and Kahrovic (2015) that Outsourcing of business functions lead to several advantages like building core competency, flexibility, reduction of costs and reduction in the required capital investment. Another opinion was given by Iqbal & Dad (2013) who said that the companies handover their functions to other companies to seek perfection and to focus on their core functions. This leads to the global advantages to the companies by letting them compete with the other organisations. The main reasons why businesses decides to outsource their functions includes improvement in the flow of cash, payments, staffing and in the whole business performance. Outsourcing is adopted by the business to get competitive advantage at a global level. Because of the use of technology accessed from different parts of the world, the business is able to provide better services and products to the customers. This also enhances customer satisfaction and also enlarges the scope of the companies and their growth in the industry (Marvin, 2011).

Scope of the research

In contrast to the above views there are some of the authors which are against outsourcing the business functions. In their view, outsourcing of the business functions can lead to the threat to privacy and confidentially of business functions of the company. It also includes some hidden costs which increases the overall cost of operations of the business. It also creates some of the quality issues with the functions which affect the customer satisfaction. Outsourcing can also lead to the loss of managerial control which creates a threat to the privacy of the organisations. It can create issues between the parties and also the response and communication between the parties can slow down. In the views of Brcar (2011), outsourcing industry will rise in future.

Outsourcing of business functions can bring competitiveness in the organisations. There are many examples which prove that outsourcing of the business functions can be advantageous as well as disadvantageous. According to Cowley (2004), the biggest example of failure of outsourcing is the case of cancellation of an outsourcing contract between JP Morgan and IBM where the contract of $5 billion was cancelled by JP Morgan and they started their in-house production facilities which was much more profitable for them. Another example shows the success story of outsourcing the business functions. The example is of P&G which outsourced its Research and Development activities which ultimately increased the overall revenue of the company.

Also, the statistics shows that outsourcing has become famous in the last two decades and it brought an increase of savings in the savings of the companies from 10 to 15%. The countries nowadays are investing huge amounts on the development of outsourcing functions. United States contributed $172 billion in the industry in 2009. There are around 145 organisations from United Kingdom and United States which was surveyed in which 23% of the organisations experienced benefits of costs. The companies which uses outsourcing services the most are Information technology, web designs, recruitment services and more. The multinational companies are taking it seriously and this has been proved by looking at the statistics. In the views of Sharma & Loh (2009),  There will be tough competition in the industry and the number of o0utsourcing  companies have been doubled between the years 2005- 2008 and 605 out of them are showing their interest in expanding their services. The companies have saved 3.5 times than their actual savings.

Advantages and Disadvantages of Outsourcing Business Functions

It is finally advised to the companies that before outsourcing the business activities, the companies should consider the type of services, reviews for the outsourcing partner, costs, etc. there should also be effective communication which boosts up the business and also its performance. Optimum planning should be done before executing them so that results can be effective. Long term relationships are needed to be developed for so that the benefits for both the parties can be maximised (Garland, 2015).

The sources used for collecting information in the research are good in quality. It improves the quality of the research and also makes it a valid one. Also, the sources referred are of the year 2004 and later which shows that only the latest information is referred to conduct the research. Most of the research papers are of the year 2012 and above which shows that the data and information are recent.

These are the following research questions which are needed to be answered through research:

1. What does outsourcing of business functions mean?
2. What are the possible advantages of outsourcing business functions?
3. What are the disadvantages of outsourcing business functions?

This section is one of the major sections of the research report because in this section, the details about the methods adopted for conducting research and for data collection will be discussed.

There are different research methods through which the research can be conducted. One such method is mixed method of research which is followed for this research. In this method, both qualitative and quantitative form of data is collected through many sources of data like primary or secondary sources. Both the forms of data together form mixed method of research which is adopted for this research (Zikmund, et al., 2010).

Both quantitative and qualitative approach has been adopted for completing the research. Qualitative approach have been used for collecting the data in the form of opinions, descriptions and different views while quantitative approach is used for collecting the data in form of numbers. These approaches have contributed in maintaining the quality of the research and in gaining various insights for the topic (Wilson, 2016).

Data collection is the process in which the information and knowledge is gained from various sources in order to answer the research questions. Data is collected from primary and secondary sources so that proper understanding can be made on the topic of the research. Primary sources of data are those which help in collecting the first hand data whereas secondary sources of data are those which provide the second hand data which is already in use by others. On the topic of the research both the sources of information are used. Primary source of data is survey questionnaire while the secondary source of data is journals, articles, books and other web sources (Mackey and Gass, 2015).

Research Papers and Opinions

Sampling can be understood as the process of choosing the subset of population from the whole population. In this research, simple random sampling technique is used where every element has same chances of getting selected without any bias. In this survey, different businesses in Australia are surveyed which deals in many business functions. They are asked whether they outsource their business functions or not and what are the possible harms and benefits of the same. The size of the sample is 10. Ten businesses will be selected randomly to answer the survey questions. It will help the researcher to decide whether outsourcing is advantageous or disadvantageous (Flick, 2015).

The research is reliable as all the sources used for collecting the information are genuine and recent. The content of research report is referenced in order to prove their authenticity. The information is valid as the special permissions are taken from the relevant authorities to conduct the survey and to access the information from library. Strong passwords are used to secure the data collected so that the genuineness of the data can be maintained.

Ethics are the principles which decide between the right and wrong. Ethics have been followed while taking up the research by maintaining the confidentiality of the survey respondents. The responses given by the respondents are not modified. Even the data collected from secondary sources have not been misinterpreted.

The limitations of the research can be understood as the factors which affect the process of research and its results. Time was one of the main limitations because only limited time was available to conduct the research program. The sample of the survey to collect the data is selected randomly which might affect the quality of the data. Also, the sample size is small which might hamper the results of the research.  There was also shortage of resources. This shortage might affect the quality of the research.

Research Plan can be understood as the blueprint for conducting the research step by step. It is planning of events to carry out the research in given time successfully. The plan for this research is made and is given below:

Gantt chart can be referred to the graphical representation of the action plan which shows how the research has been carried out step by step.

Panneerselvam (2014)

Conclusion

It can be concluded from the research project that Outsourcing of business functions is now practiced by many organisations. It is because it is the need of the hour. The business organisations nowadays have so many functions to perform in a single go that they are not able to focus on their core functions which reduce their capabilities. For solving this issue, they outsource their functions in order to access expertise and to make themselves able to focus on their core functions. It is clear from the research that before outsourcing the functions, the companies need to ensures the quality of work of the outsourcing partner and should go through its reviews. The terms and conditions should be built on which the whole process can take place. The research clears that it has several advantages and disadvantages but it depends on the companies, outsourcing partner and level of communication between them. The research is been completed by taking primary and secondary sources into consideration. The real life examples of the corporates also discussed to show how it really affects the companies. It shows that it depends on various factors that the business functions should be outsourced or in house facilities should be developed.

References

Brcar, F 2011, ‘The Perspective of Business Process Outsourcing in Slovenian Organizations’, Organizacija, Volume 44.

Bryman, A and Bell, E 2015, Business research methods. Oxford University Press, USA.

Cowley, S 2004, ‘ Update: J.P. Morgan cancels $5B IBM outsourcing deal’. [Online] Available at: https://www.computerworld.com/s/article/95933/Update_J.P._Morgan_cancels_5B_IBM_outsourcing_dea l.  (Accessed 17 August 2017).

Flick, U, 2015, Introducing research methodology: A beginner's guide to doing a research project, Sage.

Garland, A 2015, ‘Five of the biggest outsourcing failures’, ITproPortal.

Iqbal, Z & Dad, A M 2013, ‘Outsourcing: A Review of Trends, Winners & Losers and Future Directions’, International Journal of Business and Social Science, Vol. 4 No. 8.

Krstic, B. and Kahrovic, E., 2015. Business process outsourcing as a tool for improving enterprise efficiency. Ekonomika, 61(3), p.31.

Mackey, A and Gass, S M, 2015,Second language research: Methodology and design, Routledge.

Marvin, K T 2011, ‘Global Trends in Outsourcing and their Impact (Doctoral dissertation, Worcester Polytechnic Institute)’.

Panneerselvam, R, 2014,Research methodology, PHI Learning Pvt. Ltd..

Pratap, S, 2014, ‘Towards a framework for performing outsourcing capability’, Strategic Outsourcing: An International Journal, 7(3), pp.226-252.

Sharma, A & Loh, P 2009, ‘Emerging Trends in Sourcing of business services’. Business Process Management Journal., Vol. 15 No. 2.

Wilson, V 2016, ‘Research Methods: Mixed Methods Research’, Evidence Based Library and Information Practice, 11, 56-59.

Zikmund, W G, Babin, B J, Carr, J C & Griffin, M 2010, Business research methods, 8th edn, South-Western Cengage Learning, Mason, Ohio.