Business organisation and policy Essay Example | Topics and Well Written Essays - 500 words - 1

Business organisation and policy - Essay Example Moreover, when large companies expand their limits considerably they wanted to focus on more important activities in the business function rather than small internal functions. Outsourcing also functions on similar concepts. It has been seen that companies have increased their outsourcing and off-shoring dependency. These arrangements include both rewards and risks to the companies, but outsourcing is not an easy task. There are certain steps with the help of which the risks can be minimised and rewards can be earned at each and every stage. The term outsourcing means contracting external providers for performing certain functions for the company. This includes services related to information technology, development, maintenance, support or production. There are BPO (business process outsourcing), call centres and human resources. The key drivers that can be considered for outsourcing functions is generally to reduce the operating cost, development, increasing sales and reduction of other internal costs of the company. The focus is more on the core competencies and when the company focuses on tapping the vendors to integrate the best practices and innovation. Increasing the scalability and the flexibili ty of the operations or for gaining access to low cost human capital might also be a driver for outsourcing (Ernst & Young, 2005, p. 10-12). It should be kept in mind that most of the time outsourcing fails due to various reasons. Outsourcing comes with certain combination of risk and benefits. If they are not well managed then both internal and external risks can adversely affect the performance of the business. In order to deal with the complex risks, companies must go for holistic risk management approaches. In this regard the issues of outsourcing life cycle can be included. Each stage of this life cycle describes