Merits and Demerits of Outsourcing

Offshore outsourcing as well as local outsourcing has gained popularity with the increase in global and local competition in the corporate world. As such, business organizations have sought outsourcing as a way to achieve better quality and efficiency in production and service delivery at a lower cost. The outsourcing effort has allowed them to offer lower prices, better quality and enhance their competitiveness and sales volumes. In order to attain this, goal organizations have sought cheaper labor, raw materials, and other forms of requirements for their operations. Outsourcing has been one of the solutions to competition, and most organizations have outsourced their non-core operations to cheaper labor zones in the developing world so as to enjoy low labor costs and cheaper resources. This has in turn increased their profitability and competitiveness. Apart from cost-cutting, the outsourcing firms have been able to use outsourcing to tap into highly skilled and experienced labor forces across the globe. It has enhanced production and even facilitated round the clock service provision. However, in spite of the positive effects of outsourcing, some companies have shown clear failure in their bid to outsource due to challenges, such as cost escalation, poor quality work, and theft of intellectual property-just to mention, but a few. As such, outsourcing could be both positive and negative in terms of results attained after implementation. Therefore, prior to making any outsourcing contractual arrangement, it is necessary to make careful consideration of the situation within the company and the outsourcing market to determine whether the bid will be fruitful or negative for the organization. The analysis is essential in determining the success of any outsourcing bid. This paper reviews the merits and demerits of outsourcing by making a systematic literature review (SLR) that looks at both the negative and positive side of outsourcing.