Question

N an attempt to cut expenses, an organisation disbanded its IT department and outsourced its IT function to a business process outsourcing company. In doing so the company has managed to save 20% on its IT function expenditure.

Outsourcing functions to business process outsourcing companies will cut expenses.
A.Conclusion Follows
B.Conclusion Does Not Follow

Answer 1

The conclusion that outsourcing IT functions to a BPO company will cut expenses follows from the provided example of an organization that saved 20% on its IT expenses after outsourcing.

Step-by-step explanation:

The student's question addresses the cost-saving effects of outsourcing IT functions based on an organizational example provided. In this example, the organization managed to save 20% on its IT expenses by outsourcing to a business process outsourcing (BPO) company. The proposition that outsourcing functions to business process outsourcing companies will cut expenses can be supported by the fact that many companies, as part of their business strategies, have leveraged outsourcing and offshoring to save costs.

Outsourcing refers to contracting out services to third-party organizations, potentially reducing operational costs, as labor may be more cost-efficient in other countries. The trend of outsourcing has grown significantly, with global figures showing steep increases in outsourcing expenditures. Various countries, particularly India and the Philippines, have become major destinations for BPO as they offer cost advantages. This practice is not only restricted to IT functions but extends to other service-based jobs as well. While it has been a tool for cost reduction, it has also shifted jobs from one country to another, affecting domestic employment.