Question

1. Explain two ways that sourcing can be beneficial to a company.

2. Explain two potential risks to a company engaged in outsourcing activities.

3. Describe the triple constraint. What are the three components and what is the relationship between them?

Answer 1

Step 1- Benefits of Outsourcing-
i). Better risk management- With the help of outsourcing associated risk can be shared with outsourcing partners and burden can also be reduced.
ii). Access to skilled expertise- Needs skilled expertise by a firm is the main reason for outsourcing. It allows focusing on the core mission for providing a high-quality product and service to the customers offshoring task to the people who can perform it much better.
Step 2- Risk of the company associated with outsourcing-
i). Loss of control - In the case of outsourcing, managers have a complaint about loss of control over their process technology and quality standards when they use to outsource the processes or services.
ii). Loss of innovation- Innovation may be impaired when certain support services, material management or software development are outsourced. The hiring of external providers for the purpose of cutting costs, gaining labor pool flexibility, adjustment of market fluctuations, long-standing corporative work is interrupted and may adversely affect the corporate culture of the company.
Step 3- Triple constraint-
It is a project management triangle. The combination of three restrictions scope, schedule, and the cost is the triple constraint. It is helpful for managers to know about trade-offs working and their impact on other aspects of the project.
Components of triple constraint -
i). Cost - There is a finite budget for all projects. A certain amount of money is spent by a customer for the delivery of a new product or service.
ii). Time- Every project has a deadline for the date of delivery. If we reduce the time of the project then either we need to increase the cost or reduce its scope.
iii). Scope- Many projects have to face failure on this constraint because the scope of a project is neither needed to be fully defined nor understood from the start. For increasing the scope of a project there is a need for increasing the time or cost of the project.
Relation among constraints-
All these constraints are dependent upon each other. Any of them can not be changed without affecting one or both of the others.
The satisfaction of expectations for all these constraints can be expressed as pick two: the concept that any two can be delivered in any set of three desired qualities.