Advantages and disadvantages of outsourcing projects

Project Management

Project management entails planning and coordinating an organization's resources to improve the completion of a certain assignment. Ideally, the project manager is responsible for ensuring that important resources such as intellectual property, staff, technology, and cash are used appropriately to achieve the desired results (Fink & Lichtenstein, 2014). The project manager also supports in identifying goals and objectives, as well as plans for who will execute various project components and the timeline. In addition, the project manager defines quality criteria and monitors whether completed regions achieve the planned results. Before initiating the task, it is imperative for organizations to design an implementation plan which outlines how activities will get off the ground and executed within the assigned time and resources as shown in appendix 1.

Challenges in Implementation

However, this process is not simple the way it is presented in a blueprint. There are overwhelming challenges that deter effective implementation such as inadequate support from the organization, insufficient finance, time constraints, and lack of experienced personnel to plan, coordinate and execute the project. Therefore, this paper will explicitly explore the advantages and disadvantages of outsourcing projects. Currently, complexities in contemporary business have compelled businesses to embrace outsourcing as a strategy to allow the management to concentrate on key areas of competence (Elitzur et al., 2012). The study will fundamentally give insights regarding the benefits and demerits of outsourcing projects. Therefore, a comprehensive examination of both the advantages and disadvantages provides the opportunities for management to adopt outsourcing if it aligns with the overall organization objectives as well as operational and administrative strategies.


“Barriers to effective configuration management application in a project context”

The journal examines different factors that hinder effective management of projects and justifies the need for outsourcing.

(Ali & Kidd, 2014)

“Values and disadvantages of outsourcing the regulatory affairs tasks in the pharmaceutical industries in EU countries”

The peer-reviewed journals give a comprehensive explanation of the advantages of outsourcing projects in the contemporary society.

(A,G &M.A, 2016)

“ Culture-based behaviors in global information technology projects”

The articles investigate the benefits and challenges for outsourcing projects which is usually embraced by Indian mangers.

(Amster & Bohm, 2015)

“ critical success factors from outsourcing theories as determinants of leadership roles in information technology projects”

The journal evaluates the benefits of outsourcing IT projects and the qualities required for effective management practices during the implementation.

(Andresen et al., 2007)

“Knowledge sharing and cooperation in outsourcing projects”

The journal investigates importance of outsourcing decision support systems of the organization.

(Bandyopadhyay & Pathak, 2007)

“A feasibility evaluation on the outsourcing of quality testing and inspection”

The articles gives a profound knowledge concerning how outsourcing projects enhances efficiencies through meeting quality standards.

(Choi et al., 2009)

“Enhancing project benefit realization through integration of line managers as project benefit managers”

The journal expounds on the most appropriate methods of enhancing success in the project management and implementation process.

(Dupont & Eskerod, 2016)

“Information systems outsourcing projects as a double moral hazard problem”

The journal investigates problems associated with outsourcing IT projects.

(Elitzur et al., 2012)

“Why project size matters for contract choice in software development outsourcing”

The articles explain advantages and disadvantages of contracting software development projects.

(Fink & Lichtenstein, 2014)

“The challenges of managing complexity in projects”

The journal discusses problems encountered in managing complex projects; therefore, it advocates for outsourcing of such activities to organizations that deals with such jobs.

(Hatcher et al., 2013)

“Project management knowledge and skills for green construction”

The journal examines project management practices and ways of overcoming potential problems during implementation.

(Hwang & Ng, 2013)

“Stakeholder analysis in projects”

The journal explores the role of stakeholders in enhancing project implementation and challenges encountered.

(Jepsen & Eskerod, 2009)

“Empowering project portfolio managers”

The article evaluates the role of the management in ameliorating project success and the importance of outsourcing specifically if the organization cannot offer the required support.

(Jonas, 2010)

“Investigation the impact of outsourcing on competitive advantages' creation by considering Porter's model”

The article examines how outsourcing projects bolsters competitiveness in the business.

(Kasrai et al., 2012)

“Differences between clients’ and vendors’ perceptions of IT outsourcing risks”

The journals investigate potential risks the organization is exposed to when it outsources critical projects.

(Liu & Yuliani, 2015)

“Exploring the value of project management”

The article examines factors the management ought to consider while determining whether to outsource or internally execute. Through this explaining, the scholars enumerate both merits and demerits of outsourcing projects.

(Mir & Pinnington, 2014)

“How to manage outsourcing projects”

The journal outlines different ways of managing outsourced projects to ensure the implementation aligns with organization objectives.

(Sainchuk, 2012)

“Barriers towards integrated product development”

The article explores the challenges that hinder effective execution of projects in the organization.

(Sommer et al., 2014)

“Advantages and disadvantages of outsourcing”

The journal explains both merits and demerits of outsourcing projects to external parties.

(Tayauova, 2012)

“Contemporary project portfolio management”

The articles examine best management practices to enhance effective execution of projects.

(Young & Conboy, 2013)

Research Analysis

The previous decades were indeed characterized by a tremendous increase in outsourcing projects which has transitioned the way various activities are executed within the organization. These changes are perhaps attributed to rapid developments in technologies and hostile environment. Constant growth in technology has enhanced effective execution of commercial activities within organizations irrespective of the distance and has further perfected the way contractors discharge their activities (Sainchuk, 2012). On the other hand, the fierce competition across the globe forces businesses to contract activities or projects which does not form part of key competencies to third parties. Organizations pursue outsourcing to provide the opportunity of maximizing their capabilities and further enhancing competitive edge. In the recent years, outsourcing projects relating to information technology provision, construction, product, and market research has significantly increased because of the many benefits gained by businesses. Therefore, it is agreeable that project outsourcing is vital in the contemporary environment since it relieves organization from committing time and personnel on particular activities which can be provided by contractors at a relatively low cost as shown in appendix 2.

Project outsourcing trends are expected to intensify further because of the growing success of the businesses that have already embraced the strategy. For example, the literature reveals that consistent development in modern technologies compels well-developed companies to continually contract projects attributable to information technology, desktop and help desk support, disaster recovery, product development, software application services, and software development. These are sensitive areas which require perfection; therefore, outsourcing ensures the organization is always at par with market demands as well as maximizes overall goal of profit maximization. Nevertheless, outsourcing projects is a risky practice that might put the business into a ditch especially if key parameters are not aptly considered in ensuring the right third party is selected to discharge the duty (Dupont & Eskerod, 2016). Instead of trimming the entire costs, the business may end up using more than the budgeted which may ultimately adversely affect the performance of the company. Therefore, it is prudent to ensure the right vendor is identified to avert experiencing problems related to organizational culture differences and misunderstandings between the parties, see appendix 3.

Complex projects are usually challenging for organizations to manage alongside daily activities appropriately. Sometimes, the business might lack appropriate data to use in making estimations of the required resources. Dependence on secondary data may perhaps fail to provide information that reflects the market price for materials and timing of when particular activities should be executed (Hatcher et al., 2013). In other situations, businesses are forced to hire new employees to plan, initiate and oversee the implementation process which is expensive and may not guarantee quality. Moreover, the hostile external environment including fluid economic forces such as inflation has a lasting impact on the project management and execution. Being conversant with such aspects thus triggers organizations to embrace outsourcing which undoubtedly leads to success, see appendix 5.

Advantages of outsourcing

Essentially, outsourcing projects includes the need to involve experts who enhance swiftness, allow the management to concentrate on core activities, reduce operational and recruitment costs, and share risks. First and foremost, small, medium and well-established organizations outsource to enhance efficiency in project execution. Actualizing the blueprint of the project requires experienced and highly qualified individuals which the organization lacks. Sometimes, complexities of the project might require solid knowledge on various dimensions as well as vast experience in discharging works of the same caliper. Hiring such employees for a short-term purpose is costly to the business and might negatively affect the capability of the business to finance and manage the day to day activities. Outsourcing projects to vendors who specialize in a particular field assure the business completing the plan within the projected time (Bandyopadhyay & Pathak, 2007). Additionally, resource constraints including specific equipment are also catered by the contracted firms. For instance, some tasks that significantly depend on technology such as software development require specialized equipment which may not be presently owned by the company. Therefore, the ability to outsource the project to the third parties who have comprehensive knowledge about the activity enhances efficiency in the implementation.

Secondly, outsourcing projects allows the business to concentrate on key areas of competencies. As earlier noted, this strategy fundamentally gives the management an opportunity to specialize in activities they can do best without struggle. Equally, the business capitalizes on the chance by strengthening core businesses to improve competitive edge (Choi et al., 2009). Nowadays, organizations focus on providing goods and services or engaging in activities they have more knowledge and required expertise. Going outside the area of expertise where the current personnel are less knowledgeable adversely affects other processes since the necessary attention that could be accorded to the normal areas would be diverted to the new project. Furthermore, focusing on many activities at the same time is a primary challenge to different companies irrespective of the size. It is important for the management to identify their areas of specialization and contract emerging projects to external parties who ensure such activities quality service are provided according to the laid down standards. Usually, contracted parties are famously known to offer outstanding services in order to create a positive reputation and customer loyalty. Consequently, outsourcing allows businesses to attain a competitive advantage over the others in the industry alongside financing other programs that are beyond its area of specialization.

Furthermore, outsourcing projects enable the business to reduce operational and hiring costs. Undoubtedly, planning, initiating and implementing new programs in the organization consume substantial amounts of money. In most cases, in-house employees lack the required knowledge and skills to discharge the new roles which compel the organization to initiate training programs. Ultimately, such activities increase operational and administrative costs which unfortunately fail to replicate in the overall profit making and cost minimization aims (Young & Conboy, 2013). Again, it is costly to employ experts to oversee the entire process. Therefore, outsourcing addresses these factors and ensures the business works within its capabilities. Similarly, this initiative gives the organization an opportunity to secure competitive prices for contracted services particularly if the project can be executed offshore. Activities that are carried out within business premises lead to the increase in overhead costs with affects the final price. Outsourcing allows the management to avert such expenses because it no longer has to maintain the project.

Lastly, outsourcing projects plays a critical role in risk sharing. Shifting responsibilities to the third party relieves the organization from establishing risk mitigation strategies. Because of more knowledge in doing the activities, vendors are capable of developing viable measures which significantly reduces the level of program exposure to uncertainties (Andresen et al., 2007). Besides, terms of the contract stipulate that the business only accepts a project that is executed according to the provided quality standards. Contractors are imperatively required to adhere to these provisions fail to which the company will not pay. Therefore, third parties ensure appropriate measures are put forth to minimize potential risks.

Disadvantages of outsourcing

However, contracting projects to exposes the organization to various risks. Some of the limitations include the risk of exposing confidential information, conflicts, coordination breakdowns, and loss of control as shown in appendix 4. First, it is usually challenging to coordinate professionals from different organizations particularly if effective execution of the program requires closer collaboration between the parties (Amster & Bohm, 2015). Breakdown in communication is caused by physical distance existing among employees working towards achieving a common purpose of the project. Second, outsourcing results in loss of control over the project because core responsibilities are assigned to the contractor. The business lacks the capacity to monitor the progress to assist in making adjustments closely. Therefore, inability to collaborate and evaluate the performance of the contracted party exposes the business to high risks of failure to deliver the required quality.

Also, the outsourcing projects cause security problems by exposing confidential information about the business; for instance, business and trade secrets may be revealed. Such cases may arise when the contractor work for both the business and the competitors’ Bridge of confidentiality threatens collaboration among the company, contactor, and suppliers. Furthermore, outsourcing projects are vulnerable to interpersonal conflicts (Ali & Kidd, 2014). Misunderstanding among the parties emanates from differences in culture, values, and priorities. Limited interactions and working from different locations hinder the development of trust among professionals which affects the effective execution of the project. Nonetheless, merits associated with outsourcing supersede disadvantages since most organization which ever embraced the approach evidently derived immeasurable benefits.


In conclusion, effective implementation of projects requires the management to accord the highest priority through the allocation of adequate resources. Sometimes, the entire program might be new or comprehensive to the extent of requiring the management to hire qualified employees or professionals who can perfectly plan and lead others in executing the project. Again, the hostile business environment in the contemporary society forces managers to apply superb strategies to overcome ever-emerging challenges. Because of this need, most organizations outsource projects to third parties who have more knowledge, necessary machinery, and technologies to ensure their clients are offered excellent services. Undeniably, outsourcing is important in helping businesses to achieve a competitive edge over rivals in industries. Nowadays, customers prefer dealing with organizations that provides outstanding services and products. Meeting such as aspirations requires the management to concentrate or invest significant time and resources on products and services it can efficiently offer. Businesses consistently initiate various programs which are sometimes beyond their capabilities to execute using its current personnel. To overcome myriad challenges that may trigger the attention of the management, outsourcing is adopted to help organizations concentrate on areas of key competences and share risks. Contacting the project to vendors gives the organization the opportunity to minimize operational and administrative costs and further involve experts who enhance efficiency. Consequently, the project is completed within projected time as well as at a reduced cost hence allowing the company to manage the day to day activities without disturbances. Therefore, outsourcing is the primary remedy to many challenges that deter project management in the organization particularly if the right vendor is selected and continual collaboration exists among the parties.


Ali, U., & Kidd, C. (2014). Barriers to effective configuration management application in a

project context: An empirical investigation. International Journal of Project Management, 32(3), pp. 508-518.

A, G., & M, A. (2016). Values and Disadvantages of Outsourcing the Regulatory Affairs Tasks

in the Pharmaceutical Industry in EU Countries. Pharmaceutical Regulatory Affairs: Open Access, 05(01).

Amster, R., & Bohm, C. (2015). Culture-Based Behaviors in Global IT Projects: An

Investigative Study with Indian Managers of Outsourcing Projects. Procedia Computer Science, 64, pp. 232-239.

Andresen, R., Ekker, K., & Gottschalk, P. (2007). Critical success factors from outsourcing

theories as determinants of leadership roles in IT outsourcing projects. International Journal of Management and Enterprise Development, 4(4), pp. 477.

Bandyopadhyay, S., & Pathak, P. (2007). Knowledge sharing and cooperation in outsourcing

projects: A game theoretic analysis. Decision Support Systems, 43(2), pp.349-358.

Choi, M., Brand, M., & Kim, J. (2009). A feasibility evaluation of the outsourcing of quality

testing and inspection. International Journal of Project Management, 27(1), pp. 89-95.

Dupont, D., & Eskerod, P. (2016). Enhancing project benefit realization through the integration

of line managers as project benefit managers. International Journal of Project Management, 34(4), pp.779-788.

Elitzur, R., Gavious, A., & Wensley, A. (2012). Information systems outsourcing projects as a

double moral hazard problem. Omega, 40(3), pp. 379-389.

Fink, L., & Lichtenstein, Y. (2014). Why project size matters for contract choice in software

development outsourcing. ACM SIGMIS Database, 45(3), pp. 54-71.

Hatcher, C., Linger, H., Owen, J., & Algeo, C. (2013). The challenges of managing complexity

in projects: An Australian perspective. International Journal of Project Management, 31(8), pp. 1069-1071.

Hwang, B., & Ng, W. (2013). Project management knowledge and skills for green construction:

Overcoming challenges. International Journal of Project Management, 31(2), pp. 272-284.

Jepsen, A., & Eskerod, P. (2009). Stakeholder analysis in projects: Challenges in using current

guidelines in the real world. International Journal of Project Management, 27(4), pp. 335-343.

Jonas, D. (2010). Empowering project portfolio managers: How management involvement

impacts project portfolio management performance. International Journal of Project Management, 28(8), pp. 818-831.

Kasrai, A., Mehrmanesh, H., & Ayazzade Shirazi, R. (2012). Investigation the impact of

outsourcing on competitive advantages' creation by considering Porter's model; Case study: Zamyad Company. Management Science Letters, 2(4), pp. 1065-1072.

Liu, J., & Yuliani, A. (2015). Differences Between Clients’ and Vendors’ Perceptions of IT

Outsourcing Risks: Project Partnering as the Mitigation Approach. Project Management Journal, 47(1), pp. 45-58.

Mir, F., & Pinnington, A. (2014). Exploring the value of project management: Linking Project

Management Performance and Project Success. International Journal of Project Management, 32(2), pp. 202-217.

Sainchuk, A. (2012). How to manage outsourcing projects. Technology Audit and Production

Reserves, 4(6), pp. 15-16.

Sommer, A., Dukovska-Popovska, I., & Steger-Jensen, K. (2014). Barriers towards integrated

product development: Challenges from a holistic project management perspective. International Journal of Project Management, 32(6), pp. 970-982.

Tayauova, G. (2012). Advantages and disadvantages of outsourcing: analysis of outsourcing

practices of Kazakhstan banks. Procedia - Social and Behavioral Sciences, 41, pp. 188-195.

Young, M., & Conboy, K. (2013). Contemporary project portfolio management: Reflections on

the development of an Australian Competency Standard for Project Portfolio Management. International Journal of Project Management, 31(8), pp. 1089-1100.


Appendix 1. project management process

This diagram show various activities involved in initiating, planning, and implementing a project. Project management is usually a complex process which requires highly qualified individuals to oversee the execution (Fink & Lichtenstein, 2014). It is important for the implementers to be more knowledgeable in order to overcome potential challenges.

Source: (Fink & Lichtenstein, 2014)

Appendix 2. Advantages of outsourcing projects in the contemporary society

Appendix 2 portrays benefits achieved by business from outsourcing projects. It is beyond doubt that contracting projects to third parties offer various opportunities that allows the business to maintain competitive edge (Kasrai et al., 2012). Some of the merits revealed from the literature review are shown as follows.

Focus on core activities

Reduce operational and administrative costs

Enhance efficiency in project execution

Share risks with contractors

Source: (Kasrai et al., 2012)

Appendix 3. Growth rates in outsourcing

There is a rapid increase in outsourcing across the world. Some of the factors contributing to this increase include rapid develop in technology and intense competition in the market. The capability to provide excellent services by third parties has improved demand for outsourcing services hence spurring establishment of many companies. Therefore, the graph below shows the growth in outsourcing market in the UK since 2011 to 2016 indicating a consistent increase.

Source: (Dupont & Eskerod, 2016)

Appendix 4. Disadvantages of outsourcing projects

Nonetheless, outsourcing projects exposes the organization on different risks which if not appropriately managed the business might fail to achieve discussed benefits. These perils are usually inevitable in projects that are lead by inexperienced employees. Most common limitations uncovered in the study can be summarized in a graph as shown below.

Source: (Liu & Yuliani, 2015)

Appendix 5. Reasons why businesses outsource projects

Organizations are motivated by different factors before making decision on whether to outsource projects or not. Some of the factors identified can be expressed in terms of percentage as shown in appendix 5.

Source: (Tayauova, 2012)

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