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| Author: | Chalos, P. |
| Title: | Costing, Control, and Strategic Analysis in Outsourcing Decisions |
| Journal: | Journal of Cost Management
1994 : WINTER, VOL. 8:4, p. 31-37 |
| Index terms: | BUYING COSTS |
| Language: | eng |
| Abstract: | What have traditionally been considered inhouse functions and services are increasingly being obtained from outside vendors. Given the trend toward outsourcing, one important question is whether outsourcing always leads to win-win situations for both buyers and sellers. The empirical evidence suggests that companies do not always realize the benefits they expected because they often underestimate transaction and coordination costs. Marginal production costs may also be distorted because of arbitrary cost allocations and inclusion of non-value-added activities. Although outsourcing is not a panacea for all the problems that face a company, this article explains the conditions under which outsourcing may be a desirable alternative |
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