Answer:
Firstly, outsourcing simply means transfer of a business activity to a third party vendor. The value creation activities that a company should outsource to independent suppliers are as follow:
- Activities which are risky to be perform in-house
- Activities which can improve business process such as higher flexibility and reduced inventory
- Activities which can be performed in a cheaper and better way by supplier
It is important to know that outsourcing help companies saves time and resources and reduces any shortage of skill in the area where they want to outsource.
Despite the huge benefit of outsourcing, there are risk involve in activities of value chain for a company, these are
- Failure of vendor to deliver
- Data security may be leaked
- Processes may face discipline issues.
