Outsourcing transferring internal business affairs to an external organisation.
Advantages
- Core activities can be focused on.
- Quality can occur, despite lacking certain skills.
- Helps cut production costs for contractors.
Disadvantages
- There must be mutual trust between the business and the subcontractor.
- Quality control is passed onto outside parties, therefore standards may not be met.
- Outsourcing requires effective communication and coordination.
- Can cause uncertainty due to restructuring and staff redundancies.
Offshoring a type of outsourcing which involves relocation business functions and processes to an overseas organisation.
Advantages
- May be cheaper to operate in an LEDC.
Disadvantages
- Offshoring has been associated with unethical practices.
- Quality assurance becomes difficult.
- Susceptible to economic and political instability.
Insourcing using an organisations own workers and resources to complete tasks that would have otherwise been outsourced.
