What key determination must be made prior to outsourcing a function?

What key determination must be made prior to outsourcing a function?
A . What is the cost of resources and technology required to keep the function in-house?
B . Is there a service level agreement in place?
C . Does it involve a competency core to the firm?
D . Has a needs assessment been completed?

View Answer

Answer: C

Explanation:

The purpose of outsourcing is to ensure best practice in key business components such as data processing, supply-chain management, warehousing, etc. By divesting themselves of these non-core activities, companies can focus their energy on core business areas where they have the competitive advantage, while taking advantage of cost savings from the outsourced functions. Core activities are the vital activities of an organization. If the organization outsourced its core functions, it would be creating a competitor or dissolving itself.