Outsourcing is one of the most important strategies pursued by different companies today to increase efficiency and output. Regardless, some related advantages and disadvantages should be considered before a decision to outsource is made. In outsourcing logistics, a benefit to the economy is lowered entry barriers to particular markets by increasing competition. It also enables companies to operate at low labor costs, increasing production and exports. This, in turn, strengthens the economy because of an increase in imports and exports ( Aktas et al., 2011) . It is, however, argued that it is not suitable for the economy because it leads to loss of jobs and loss of manufacturing capacity, which reduces the economic sustainability in the country affected.
To companies, some of the advantages include a significant reduction in back-office-related activities; hence, removal of management burden, risk handling reduction, strengthening a company’s economies of scale, and access to technology that the company doing outsourcing might not have or afford. With better performance, employees not only get motivated but sometimes share in the success of the company. On the other hand, there are many related disadvantages, for example, lack of a desirable strategy in outsourcing, not putting in place a proper outsourcing appraisal system or process, and working with a vendor who offers low prices. Mostly, this results in overlooking other instrumental aspects, for example, ethics. The above could lead to a reduction in production by some employees and the company in general because their time could be spent solving outsourcing bottlenecks that affect an organization’s effectiveness. When the supply of particular materials is disrupted, for example, the company outsourcing is bound to be negatively affected because of halted production ( Aktas et al., 2011)
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There are a few reasons that can justify an increase in outsourcing in logistics. Most of these are efficiency-related aspects. Today, most companies are looking into outsourcing because of cost efficiency, operation efficiency, and saving time for other indispensable organizational undertakings ( Aktas et al., 2011) .
References
Aktas, E., Agaran, B., Ulengin, F., & Onsel, S. (2011). The use of outsourcing logistics activities: The case of turkey. Transportation Research Part C: Emerging Technologies , 19 (5), 833-852.
