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ieve economies of scale within their internal activities and functions as they lack the ability. But, they are more flexible in absorbing change and innovations into their organisation. Thus outsourcing may come as a saviour for small companies to achieve functional efficiency similar to those of large companies (Juma’h and Wood, 2000). Juma’h and Wood (2000) argue that larger companies theoretically benefit less from outsourcing as compared to smaller companies in terms of cost reduction as large companies already enjoy the benefits of economies of scale in many cases or at least possess the capability or expertise to achieve it internally. In despite of this, the most frequent users of outsourcing are larger companies.

There are apparently other reasons underlying for outsourcing other than realizing benefits of economies of scale from competitive advantage. According to Fan (2000) the other motives to outsource are: reduced costs, improved managerial focus, improvised quality, enhanced flexibility to facilitate change. Fill and Visser (2000) identifies the same drivers with some additions such as: increased knowledge and capacity, potential for creating strategic business alliance, reduction of investment, technical considerations, increased access to functional capacity, and fewer internal administrative problems.

Outsourcing is generally accepted as a view of contracting out or disposing parts of business to achieve tactical benefits. However, Johnson (1997) in contrast cited a new view on outsourcing: viewing outsourcing as a way to offer structural change. According to the new approach, the company undertaking the activity (outsourcee) is viewed as being brought in by the outsourcer rather than contracted out. The author further developed these views and classified reasons to outsource into tactical and strategic reasons. Both these reasons differ from each other on the basis of their focus on short-term (tactical) and long-term (strategic) benefits.

The tactical reasons for outsourcing comes from the functions outsourced which are beyond the control of the company and difficult to manage. Smaller companies generally go for outsourcing with the view of achieving economies of scale while large companies often benefit from outsourcing activities which are out of their control. Another reason of this category may be that the company outsource activity at times of financial distress to obtain capital funds for core activities. But, these tactical reasons to outsource are of short term nature (Douglas and Meehan, 2001).

Apart from tactical reasons, there are other strategic reasons to outsource which focuses on longer term and are associated with gaining access to world-class knowledge and expertise, the risk sharing and the focus on core competencies. An organisation can reduce its risk significantly by means of outsourcing. The foremost strategic reason for outsourcing is to increase company focus on core competencies of the organization (Douglas and Meehan, 2001).

Problems with outsourcing

Outsourcing poses a number of rewards to an organisation such as cost reduction, focus on core competencies, improved quality. But, there are number of disa本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。