Outsourcing And Make-Or-Buy Decisions
Outsourcing and make-or-buy decisions. What cost factors should influence the decision on whether to outsource the payroll functions?
Horngren, Sundem and Stratton (2004), say that "When managers consider the make-or-buy decision for services, it is often called outsourcing" [1, p255]. Outsourcing "(Â…) is often defined as the delegation of non-core operations or jobs from internal production within a business to an external entity (such as a subcontractor) that specialises in that operation" [2].
Globalization and increased competition have in a way forced the outsourcing concept into play. Managers strive on finding new ways to increase efficiency, reduce costs and raise profits to shareholders, and shareholders love it. Human resources is just one of the business functions that are traditionally outsourced and like human resources, functions like IT, administration, distribution and logistics, finance and others have been known to been outsourced successfully.
Even......
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