The Factors Affecting of SMEs’ Outsourcing Decision Making

Abstract

The focus of this paper is to develop a framework for SMEs’ outsourcing decision making, this paper will review recent studies of related dimensions to identify the factors affect outsourcing decision which are including two main categories, the outsourcing benefits and the risks of outsourcing .the benefits factors for outsourcing are cost reduction, transfer fixed costs to variable, improve service quality, Increase speed, increase flexibility, access to latest technology, increase focus on core competencies. The risk factors of outsourcing are hidden costs, loss of core competence, less flexibility, loss of knowledge, supplier problems and low morale. The study found that the framework for SMEs’ outsourcing decision making, based on the factors found from this study, is including four factors affect outsourcing decision which are outsourcing benefits, outsourcing risks, core competencies and vendors (suppliers).

Keywords: outsourcing, core competencies, risk, decision, benefits, SME