The decision to outsource is often made in the interest of reducing firm costs, redirecting focus on the competencies of a particular business, or making more efficient use of HR, IT and other resources. As companies focus on managing their operations in a difficult economic environment, they seek to become more focused and efficient.
Outsourcing and offshoring initiatives can help an organization fine-tune its business model to become more resilient and profitable. However when outsourced functions have financial reporting implications, public reporting risks may arise. This issue explores the advantages, disadvantages and risks associated with outsourcing, and how the risks can be managed when decisions are made to outsource and/or offshore business activities.