Question: Which of the Following Statements Is Correct about Outsourcing?

When you consider outsourcing, you must ensure you have the correct information. This article addresses the question of which of the following statements is correct while looking at outsourcing.

Question: Which of the following statements is true of the outsourcing decision?

Which of the following statements is true of the outsourcing decision?

a. Outsourcing decreases the extent of a company’s vertical integration.
b. Supplier reputation is a critical issue in an outsourcing decision.
c. An outsourcing decision involves a purchase offer from a customer at a lower-than-normal selling price.

What is outsourcing?  

To define outsourcing, you need to ask: What is business outsourcing? Outsourcing is a business practice and activity in which a business uses an external company to take over some of its internal functions. The core reason for this is that completing the core work internally is too expensive; outsourcing is more cost-effective. Moreover, outsourcing services is linked to cost-cutting, as the business reduces operating costs. Plus, the business will outsource to BPO companies, such as the renowned Aristo Sourcing.

The true answer

Which of the above statements is true of outsourcing? The answer to the question is both A and B statements. In other words, outsourcing can decrease the extent of a business’ vertical integration while establishing the reputation of the outsourcing service provider, which is a critical issue in the outsourcing decision.

Also, outsourcing decreases the extent of a company’s vertical integration and establishes the supplier: two critical issues in an outsourcing decision.

a. Outsourcing decreases the extent of a company’s vertical integration.

The sustainability of complex global supply chains can be accomplished using one of two main methods: vertical integration or outsourcing.

Vertical integration

Vertical integration implies that a business or firm combines parts of its production with another business. However, this approach is not without its flaws. This approach is best for larger companies. These businesses will have issues, such as observing internal events. Monitoring such events can become a complex and mind-numbing task. Businesses may also not execute the monitoring owing to technical or financial limitations. In contrast, outsourcing offers more benefits to small to medium-sized companies.

Outsourcing

Although vertical integration provides many benefits, this method is laborious and costly. Outsourcing usually offers a competitive advantage for a company. Additionally, although globalization can be seen as the driver for outsourcing, there is a statement that it increases job dissatisfaction among workers. However, a higher level of outsourcing gives a firm better control over all outsourced. Also, it reduces political risk by allowing the company to avoid investing in plants and equipment abroad. 

The benefits of outsourcing

Outsourcing is cost-saving

When a business outsources a service or services to an outsourcing company, these services can include payroll, technology, customer services, or research, which are some famous examples of outsourcing. These types of services are outsourced because this can cut the business operations costs while typically boosting the efficiency of the business. More than just the apparent cost-savings, the company can also save on additional charges. These costs include more than mere salaries; taxes, benefits, and investments in business equipment, infrastructure, and information systems must be considered.

Outsourcing to increase efficiency

If the business is an eCommerce business and trades internationally, being available for more business hours is a benefit. The outsourcing service can be located in a different time zone or have teams working shifts, mainly focusing on their English markets. The online business can then potentially reach more customers. Moreover, by outsourcing the time-consuming tasks, the core team of experts can focus on their principal duties. This will boost productivity.

b. Reputation of the supplier is a critical issue in an outsourcing decision

Going cheap might, on paper, save you money, but be careful, as this strategy could affect an organization negatively. Look at the reputation of the outsourcing service provider. This is an important issue a firm should consider. A business should consider whether the outsourcing company is trustworthy and whether there is support to manage the virtual assistants (VAs or remote assistants) they supply. Moreover, as a business, you want deliverables to be presented on time – no excuses. If you are a small or medium-sized business, researching the reputation of the outsourcing service is critical. This will eliminate any risks.

The bottom line 

The answer to which of the following statements is true of the outsourcing decision: a. Outsourcing decreases the extent of a company’s vertical integration, and b. The reputation of the supplier is a critical issue in an outsourcing decision. Outsourcing can help a business to upscale faster. This is because, with outsourcing, a company can reduce its expenses and increase its productivity while onboarding talent that might be lacking. This staffing solution can significantly benefit small and medium-sized businesses or SMEs. However, large international corporations are leading the growth of outsourcing. Yet, before outsourcing, you must consider your needs and what you can do to achieve your goal. For instance, you can use a free call to the reputable company Aristo Sourcing. Also you can then engage with our outsourcing expert, who will offer you no-nonsense advice. You can ask questions to find solutions that work for you and your firm. If you want to use this complimentary service, click here.

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