Outsourcing isn’t recent as managerial practice. However, this phenomenon of outsourcing has increased significantly in recent years. Two main factors have contributed to explain this development. First, the need to create more value for shareholders and customers, and secondly, the emergence of a market of specialized providers with skills to provide businesses with property and custom services.
The main objective of this article is to explain the phenomenon of outsourcing through the transaction cost theory and resource theory, highlighting the determinants and risks of this management practice.
The literature review shows that the search for flexibility, productivity gains, quality and focus on the heart of the trade are the major determinants of operations outsourcing. Moreover, the risks are mainly: loss of control, loss of quality, cost problem and the difficulties in the management of human resources.
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