The Viability of Outsourcing in Organisational Performance: Benefits and Risks

Abstract

Outsourcing is part of a system, as it includes products and services integrated in a value chain and which are performed by an external (contracted) firm, aiming to establish an interdependent, collaborative and trusting relationship between the contracting and contracted firms. Like any dimension of business in organisations, changes in organisational structures and in how the service is produced/provided, outsourcing brings benefits and risks. Therefore, from literature review method, this chapter aims to explore the concept of outsourcing as a differentiating tool in organisations’ performance, emphasising the benefits and risks. The results showed the dimensions to consider in the decision to implement outsourcing, which are: (1) transaction costs, (2) use of resources, and (3) collaboration between the parties. The contribution of the study is to present a synopsis of the outsourcing topic, specifically the theories that support it, its benefits and risks. Additionally, a decision-making model is presented, in the certainty of its usefulness for the organizations’ managers.