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Answer -
Outsourcing refers to the process where the non-core business activities are given on contract to agencies specialized in such work. This helps the business concentrate more on areas which are of more importance. It has the following advantages:
1. It helps an organisation to shift focus on core areas that helps them come up with more innovation in market
2. The work that is outsourced to a specialist organisation helps in increasing the efficiency of the organisation
3. A large scale organisation will find it difficult to cut down costs in back office operations if the office is located in their native country, the same work will be more economical if it is outsourced.
However, there are certain limitations of outsourcing and they are:
1. Information leak can occur if the organisation that are performing the function choose to share information with the rival organisations.
2. Quality may suffer as the organisation to which contract is given starts looking to earn more profit.
3. Countries in which work is outsourced may have social unrest, it can lead to disturbances.