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When should a corporation or business unit outsource a function or activity? Provide at least one example of a function your organization should outsource or at least one example of a function your organization should not have outsourced.
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Krajewski and Ritzman (2002) define outsourcing as “allotting work to suppliers and distributors to provide needed services and materials and to perform those processes that the organization does not perform itself.” It will make sense to outsource when:
- It helps in reducing capital investment:
Supplier reaps the benefit of higher demand to pay for capital and aggregation of demand to smooth uncertainty. - Focus on Core Competency: buyer is able to focus on its core strength (its talents, skills, and knowledge that …
