Outsourcing Management: The Dilemma of Small and Medium Enterprises

Description

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Abstract

The practice of outsourcing management in industry and organization is universally acknowledged as effective instruments for competitiveness.

Even in small and medium enterprises (SMEs). This study tries to look at the role outsourcing management can play in the development of small and medium enterprises (SMEs), their current dilemma that prevent them from becoming active players in the regional and global markets.

The study also highlights the benefit, risk and the kind of measure that need to be taken to enhance their effective participation in the modern management technique (outsourcing).

The study draws on empirical studies undertaken on selected small and medium enterprises in Benin City and part of Lagos state. The investigation supplies a realistic result on the dilemma of outsourcing management to small and medium enterprises. (SMEs).

Introduction

As companies’ attempts to focus on core competences, many are considering outsourcing various aspects of their in-house operations. The rapid growth in outsourcing has occurred because organizations are struggling to cope with the demands on their skills.

Aoki 1988- says when products becomes increasingly differentiated and renewed, the best strategy appears to focus on core competences and let other firms deal with production of other parts, machine maintenance or distribution.

Almost every organization outsource in some way. Typically, the function being outsourced is considered non-core to the business.

The decision to outsource is often made in the interest of lowering firm or making better use of time and energy costs, redirecting or conserving energy directed at the competences of a particular business, or to make more efficient use of land, labour, capital, (information) technology and resources.

It is essentially a division of labour. Although outsourcing has been around as long as work specialization has existed, in recent history, companies began employing the outsourcing model to carryout narrow functions that could be done more efficiently and therefore more cost-effectively by other companies with specialized tools and facilities and specially trained personnel.

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