PROCUREMENT: Reasons and Risks of Outstanding in Most Public Institutions

Outstanding is the process of Delegation Company’s business process to find third parties or external agencies, leveraging benefits ranging from low labor, improved quality to product and service innovation. When outsourcing transgresses national boundaries and is managed by institution located in other countries, outstanding takes the form of offshore.

The following are the reasons of outstanding in most public institutions

Outstanding allows you to focus on core value, outstanding non-core business functions will release valuable time and resources which can be dedicated to managing core functions instead. This means that the management of non-core functions such as call centre operations or mail-room is transferred to your outsourcing partner. In turn your institution reaps the advantages of your focused view of the areas that are critical to your business, allowing you to be more effective and efficient in your delivering services.

Outstanding gives you access to experienced individual with a higher value level of skill, institution do not always have access to skilled employees for all areas of higher business – even big companies face the same issue as the cost of labor continues to rise. Outstanding can then be a brilliant option. Processes that are not core to your business, are core process or outstanding companies, and therefore it is in their interest to deliver the higher quality of services in those areas.

Outstanding gives you the ability to cut costs, costs reduction is often listed as one of the main reasons for companies to outsource; starting with a flexibility that allows your company to expand operations as and when they are required. Other costs benefits include reduced capital outstanding and potentially cheaper labor costs if you were to consider outsourcing offshore.

Improves service quality and speed of delivery, outstanding can be an effective tool for improving the quality of services through innovations and flexibility.

In an increasingly competitive market, outstanding campaigns are continuously improving quality in an effort to stand out from the crowd.

Outstanding gives you access to more advanced technology; keep up with the fast pace changes in technology, companies can look to outsourcing for help. The most forward-thinking outstanding companies will consistently invests in new technologies to to ensure they remain at the forefront of their market. This is usually means you will have access to the latest technology and advanced processes.

Make capital funds available, by outstanding non-core business functions you can spend your capital funds on items that are directly related to your product or your customers.

It increase productivity, outsourcing increasing productivity when they produce more products due to presence of buyers from different areas. Example, local areas, the farmer produce more products such as beans maize, when the sales at market must be increased so you produce more depending on need of customers.

Risks of outstanding in most public institutions

Control may be lost, Critics  argue that an outside vender will never be as effective as a full-time employees. Other concerns include confidentiality of data and disaster recovery. However, a supervisor that is knowledgeable in managing an IT staff member will usually be required.

Employee morale may be affected; this is particularly true if you will be laying off employees to replace their job functions with an outstanding firm. Other employees may wonder if their job is at risk, too.

Reasons for abandoning services, there are many reasons why a company might go out of the service-provider business. Some are due to internal factors, such as poor management, inadequate funding and employees’ misdeeds. Others relate to external factors, such as industry trends, downturns in the general economy, and mergers and acquisitions.

Loss of organizational trust, for many firms, a significant non-quantifiable risk occurs because outsourcing, especially of services, can be perceived as a breach in the employment – employee relationship. Employees may wonder which group or what function will be the next to be outsourcing cost and benefits are easily identified and quantified because they are captured by the accounting system. Other costs and benefits are decision-relevant but not part of the accounting system.

Lack of customer focus, an outsourced vendor may be catering to the expertise needs of multiple organizations at a time. In such a situation vendors may lack complete focus on your organization’s task.

Generally, now that you have seen the risks and reasons associated with outsourcing the function of your public institution in the business in order to evaluate the third parties of labor and to improve quality of products.

READ: PROCUREMENT: Procurement Methods

 REFERENCES

Bits Framework: Managing Technology Risks for Information Technology (IT) Service Providers. Banking Industry Technology Secretariat, Washington, D. C. November 2003.

Allen, J. et al Outsourcing Managed Security Services, Carnegie Mellon University, Pittsburgh, PA: Software Engineering Institute, January 2003, Available at http://www.fedcirc.

King – William R. “Strategic Outsourcing Decisions Information Systems Management.