Academic journal article Journal of Economics and Economic Education Research

Efficiency Assessment of Outsourcing Transactions

Academic journal article Journal of Economics and Economic Education Research

Efficiency Assessment of Outsourcing Transactions

Article excerpt

INTRODUCTION

The purpose of the work is to study techniques (stages) for decision-making on outsourcing, as well as the tools (methods) for assessment of efficiency of outsourcing.

Russian outsourcing services market grows, and the economic crisis is the impetus for its development. The theory of outsourcing and practice of its application in enterprises need their further development.

At the time of completion of the study the main stages of transition to outsourcing, as well as the tools (methods) applicable to assess the feasibility of outsourcing were discussed and studied.

In the study, new issues were emerged that requires a more detailed and in-depth consideration: an analysis of the actual condition of a company, risk analysis and assessment (examination of quantitative risks assessment for cooperation between an outsourcerer and a customer), consideration of instruments of control for outsourcing.

METHODS

Outsourcing is a commonplace practice for both manufacturers and service providers, largely because of increased supply chain competitiveness of the global environment (J.N. Kenyon, M.J. Meixell, P.H. Westfall., 2016).

Researchers have indicated that reducing cost is the primary impetus of outsourcing (Julie Yu-Chih Liu, Asri Rizki Yulian, 2016).

Besides the cost savings, outsourcing has some other advantages, including decreasing the time to market and increasing the quality of work (Xiaowei Zhu, 2016).

The main condition for a positive effect of outsourcing is its reasonable and competent implementation within existing business processes in an enterprise (Anikin B.A., Rudaya I.L., 2009).

Transition to outsourcing is expedient if it leads to an increase in the functionally good organization of the system and consequently to increase the efficiency of the whole activity of a company (Moiseeva N.K., Malyutina O.N., Moskvina I.A., 2012).

Outsourcing decision can allow firms not only to reduce expected costs, but also to enhance their portfolio of capabilities as well as the potential to create value (Kebing Chena, Tiaojun Xiao, 2015).

An important decision faced by any organization is which activities it will engage in itself and which it will outsource (Christina Marsh Dalton, Patrick L. Warren, 2016).

The decision making process on transition of some functions to outsourcing usually consists of several stages.

In the scientific literature there are many different models of transition to outsourcing.

In our opinion, the technique of transition to outsourcing should include the following stages.

1) Analysis of the actual condition of the company and formation of the outsourcing goals.

The main purpose of transition to outsourcing is to be more efficient. In addition to achieving the main goal of transition to outsourcing, the use of outsourcing should lead the organization to better compliance with market demands what is reflected by the complex of objectives. Achieving the goals shows that outsourcing can bring a positive effect (Anikin B.A., Rudaya I.L., 2009).

Analysis of the actual condition of the company may include: identification of existing business processes, analysis of financial and economic activity of the company, and the need for changes in the company.

2) Definition of business processes to transition to outsourcing.

When deciding on services which could be candidates for outsourcing it is necessary to define a set of criteria that should be taken into account. It is possible to define among the criteria a group of "cut-off criteria", i.e. criteria that have the greatest weight in the decision, such as information security criteria, business continuity criterion, etc. (Access mode: http://bpm.ucoz.ru/publ/autsorsing/analiz ehffektivnosti autsorsinga/20-1-0-54, 20.03.2016).

3) Analysis and assessment of risks.

There could be identified the following outsourcing risks: risks related to providing no services, risks related to insufficient quality of outsourcing, risks related to information leakage, risks associated with dissolution of contractual relationships, risks of underestimating the cost of outsourcing, and other risks. …

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