The global economy drives the reasons, risks, and rewards for companies to consider embracing outsourcing for various business functions within their organizations. Outsourcing as defined in Strategic Management Planning for Domestic and Global Competition is "obtaining work previously done by employees inside the companies from sources outside the company" (Pearce, J. II & Robinson, R. Jr., 2013, p. 338). Company managers must decide what factors, risks, and benefits are viable in determining if the company should outsource to "restructure their business" (Pearce, J. II & Robinson, R. Jr., 2013, p. 338). A business can opt to choose one or as many as all of their activities to outsource within the confines of their business. Organizations strategically align with outsourcing entities for human resources, payroll, manufacturing, maintenance, travel, product design, and information technology, and many other functional business activities if these functions are found to be more cost-efficient through outsourcing than handling the functions themselves. All departments, including the Information Technology (IT) department, must consider the reasons, risks, and rewards when determining restructuring and outsourcing the workload.
Companies consider many reasons why they should or should not outsource some aspects of their business. Corporate Computer Services outlines nine different reasons why companies outsource as listed below.
Reduce and control operating costs
Improve company focus
Gain Access to exceptional capabilities
Free internal resources for other purposes
Resources are not available internally
Maximize restructuring benefits
Function difficult to manage or out of control
Make capital funds available