Outsourcing

Question 1

What is outsourcing?

Answer 1

Outsourcing involves a firm finding an external business to carry out part of the production
process, in order to cut costs or achieve a better level of service. Sometimes, a firm can
outsource its one department to the specialist firm for better performing i.e. IT, Finance

Question 2

What is off shoring?

Answer 2

When a firm finds a firm in another country for outsourcing, this is known off shoring

Question 3

What are the benefits of outsourcing?

Answer 3

 Lower operating costs (it means its costs will go down because a specialist is doing the
work so the costs fall)
 Increased flexibility in labour force
 A business can focus on main activities
 Higher quality

Question 4

What are the limitations of outsourcing?

Answer 4

 Loss of jobs within the business of outsourced operational department
 Quality issues (Any reduction in quality from outsourcing could damage a business’s reputation
and result in lower sales or impact ability to charge higher prices
 Security issues
 Delay in order can expected