Discussion on Outsourcing

Outsourcing is an agreement on practical method of hiring another company to take responsibility of internal activities of the company in order to grow business and increase distribution taking business on wide level of success. The term outsourcing is derived from combing two terms outside resourcing. A foreign body contributes and employees and assets are transferred from one responsible firm to another to distribute work and opportunities. Peter Drucker in 1990’s stated that whatever you do best do it yourself and outsource for the remaining work. It is understood from Ducker’s opinion that a company should only outsource another company or companies for aspects which the company itself is not good at. (Boyed, 2018)

Outsourcing is the decision to provide an opportunity to another company to either purchase or make what your company is making or purchasing. In my opinion, outsourcing is an intelligent way to get your work at lower cost then, why not? The company begins to earn well and work is distributed reducing the work load and expenditure. Reasons that are enough to outsource are;

Reduction of operating cost

Focus of company is improved

Resources which are unavailable in company become available

Accelerated, improved and accessible benefits

Risks are shared

Responsibilities are distributed

Increased cash influx

Elimination of responsibility which is difficult to manage

In terms of cost accounting, actual goal is get your work done at lower cost. Focus is on cost as well as on human force involved. Authenticity, precision and evaluation of work of company should be checked. Good quality work is top priority and for that control and hold of company can be lost as well.  Outsourcing tends to be a wise decision; some portion of fixed cost is covered. Until a fixed cost is obtained a short term can be obtained. It is like having a partner in case of business crisis. And it can be shut down altogether. (Putra, 2018)

References of Outsourcing

Boyed, K. (2018). To outsource or not to outsource: An accounting decision . Retrieved from https://www.dummies.com/business/accounting/to-outsource-or-not-to-outsource-a-cost-accounting-decision/

Putra, L. D. (2018). Cost Analyses: Outsourcing Decisions. Retrieved from http://accounting-financial-tax.com/2008/11/cost-analyses-outsourcing-decisions/