Which of the following is a risk that a company faces when it outsources its operations?
A)The third-party provider may not have the degree of expertise that the outsourcing company has.
B)The cost of labor for the outsourcing company may decline.
C)If the outsourcing operation is too profitable,the outsourcing company may want to acquire the third-party provider.
D)If the outsourcing operation is too successful,the third-party provider may want to acquire the outsourcing company.

Question

Quizplus · Accepted Answer

When a company outsources its operations to a third-party provider, it is giving control of that aspect of the business to someone else. This can lead to risks such as the third-party provider not having the same level of expertise as the outsourcing company or not having as strong a commitment to the success of the business. This can lead to lower quality output and potential damage to the reputation of the outsourcing company. Option B is incorrect because a decline in the cost of labor for the outsourcing company would actually be a benefit rather than a risk. Options C and D are unlikely risks as they involve acquisition, which is not typically a likely or expected outcome of outsourcing.

Which of the Following Is a Risk That a Company