TABLE OF CONTENT

1. Abstract..................................................................................................................... 2

2. Introduction…………………………………………………………………………3
2.1. Company A…………………………………………………………………….3-4
2.2. Figure 1………………………………………………………………...............4
2.3. Figure 2………………………………………………………………………...4

3. Literature Review…………………………………………………………………..5-6

4. Methodology………………………………………………………………………..7-8
4.1. Table 1………………………………………………………………………….7
4.2. Table 2………………………………………………………………………….7
4.3. Table 3………………………………………………………………………….8

5. Discussion of Results………………………………………………………………..8-9
5.1. Graph 1………………………………………………………………………….9
5.2. Graph 2………………………………………………………………………….9

6. Conclusion…………………………………………………………………………...10

7. Recommendations……………………………………………………………………10

8. References……………………………………………………………………………10

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1. ABSTRACT

Purpose – The predominant purpose of this study is to outline the advantages, disadvantages
and challenges that come with outsourcing of project management activities and to best
compare between companies that do project outsourcing versus those that do in-sourcing.

Design/methodology/approach – A brief and concise study will be conducted on project

outsourcing through the analysis and evaluation of the impact that the presence and absence
of project outsourcing has on company’s revenues, employee performance and productivity
levels. Data will be captured to help distinguish between the effectiveness and efficiency
levels of project outsourcing and in-sourcing.

Findings – Based on the data evaluation and the analysis of results, it was evident that the
company that outsources its project management activities yields the most revenues, creates
better employee performances and improves on productivity as compared to an organization
that in-source.

Research limitations/implications – The need to access to restricted organizational

information. There were information constraints due to both companies not disclosing all the
necessary data and company record statuses. However, research was based on the available
data that was put on my disposal. This will not show 100% data accuracy and a true
reflection of both company’s statuses.

Practical implications – Organizations are expected to meet their set of objectives and most
importantly to produce products or to provide services that conform to specifications. With
the implementation of project outsourcing, organizations are expected to be efficient and
effective within their operational activities.

Key words – Project outsourcing, in-sourcing, productivity, employee performance, sales,

efficiency, effectiveness, resources, outsourcing advantages, outsourcing disadvantages,
challenges

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2. INTRODUCTION

According to Larson, Eric W., (1952), Project is a temporary endeavour designed to create a
unique product, service or results. Concisely, it can be referred to as a non – repetitive, one-
time effort limited by time, cost, resources and performance specifications. It is
predominately distinguished from other management functions by its defined life span with a
beginning and an end. Typically, it involves doing something that has never been done
before. Project management is therefore referred to as an application of skills, tools,
knowledge, experience and techniques to project activities to meet the specified project
requirements.

According to Marty Pine., (05 2005), Outsourcing is best described as the strategic use of
outside resources/inputs to perform activities that are traditionally handled by internal staff
and resources. It can also be defined as a strategy in which organizations use to contract
major segments or functions of its product, processes or services to specialized and efficient
service providers. These specialized providers are usually eligible to profoundly help
organizations to advance its operational functions to meet its products, processes or services
specification requirements. It is typically used by companies to save costs.

Project outsourcing is therefore defined as a way in which organizations contract their major
project functions to specialized service providers. This is applicable when there is an
existence of a problem where by an organization experiences troubles in managing its
projects. Project outsourcing has got major lucrative benefits and as well as disadvantages
that can be harmful to project management activities. Moreover, certain challenges do arise
on neither outsourcing of projects nor in-sourcing of projects.

A detailed study will be conducted on two companies that manufacture boats. Company A -
being the one that outsources its project management activities. Company B - being the one
that does in-sourcing. The benefits, advantages and disadvantages for both project
outsourcing and in-sourcing will be evaluated and analysed to best compare company A and
Company B. A judgement will therefore be made based on the finding of results.

2.2 Company A

Robertson and Caine international yatch is a boat building company situated in Cape Town,
South Africa. The company is the largest boat-builder in southern Africa and one of the

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biggest catamaran builders in the world, having superbly built boats to its credit. Robertson
and Caine is currently building a range of population catamarans to the Africa and the world.

2.3. Figure 1: Latest boat manufactured by Robertson and Caine.

Company B:

Two oceans marine manufacturing was founded in 1989 and has evolved into one of South
African leading custom boats, based in Cape Town. Two oceans marine manufacturing
specialises in custom boat manufacturing and unique build offers the full range of services
need when buying a custom-boat. Two oceans marine manufacturing, manufactures both
power and sailing catamarans.

2.4. Figure 2: Latest boat version of two oceans marine manufacturing.

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A brief study will be conducted on project outsourcing through the analyses and evaluation of
the impact of project outsourcing to both companies’ sales, employee performance and
productivity. The study will be carried out through capturing data and considering the
company’s growth trend record over the years.

3. LITERATURE REVIEW

Outsourcing project management advantages:

According to Marty Pine., (05 2015) and Dino Butorac., (2016), one of the most
advantageous factors brought about outsourcing of projects is to enable organizations to
greatly focus their efforts and energy on their strengths with regards to its operational
activities and project activities. The creation or development of new ideas of improvement
comes into existence. Organizations or project managers tend to tab into a greater pool of
ideas and creative ways of thinking due to them having to focus more on fewer segments of
their operations whilst the other functions or segments are being contracted to specialized
service providers to perform (outsourced).

Normally, experiences are brought from the outside and they benefit the organization.
External experts or specialized service providers do not only focus on one organization at a
time but work simultaneously on other projects not related to this one organization. Through
this practise, external experts tend to bring experiences and ideas from dealing with other
projects with them to this one organization. This is not about intellectual capital being stolen,
but mainly about benchmarking, learning about other areas and applying the lessons to your
organization.

The exposure to the latest or advanced methodologies that are being used by outside
specialists. External specialists tend to invest more into project management research, new
technology and methodology. Organizations benefit from this without the need to invest as
much themselves to new technologies, methodologies and project management research. This
enables organizations to save up on money and resources.

Through saving resources or using less the organization tend to have more resources to
invest in employee training programs to enhance employee performance. This will result into
the organization yielding higher sales/revenues and drastically improving on productivity
levels of the organization.

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Outsourcing project management disadvantages:

According to Dino Butorac., (2016), possible resistance from within the organization is
created through outsourcing of project management activities. Employees from within the
organization may start to feel intimidated by an outside expert. This can result to employees
not trusting their ability of work and also make them reluctant to changes. The morale of
employees has to be always considered, however, failure to do so may affect the employee’s
level of involvement to operational activities. This stand a chance to negatively impact the
productivity levels of organizations.

Outsourcing project management challenges:

The often challenges concerning the outsourcing of project management activities are to
choose between which service providers to use and need for restricted access to sensitive
organizational information. Developing a best selection method for specialists/service
providers is sometimes difficult as you may not really know what to expect from them due to
lack of trust and unawareness of the actual capabilities and abilities of service providers.

The restriction to access sensitive organizational information may tend to affect an outside
expert. However, organizations are not always disclosing their secrets because of fair of
loosing competitive advantage.

In-sourcing

In-sourcing project management activities tend to limit project managers in terms of coming
up with better ideas. However, it improves on communication within the company.
Employees are set to know and understand every single segment of the operational activities
as they are obliged to perform without outsourcing any.

However, in-sourcing is more expensive as compared to outsourcing of project management

activities. In-sourcing has got greater potential of affecting revenues which in turn affects the
company’s productivity levels. The company is very responsible for their own research of
new technologies and methodologies. This research requires the organization to invest time
and resources.

With organizations trying to balance resources, efforts and time in in-sourcing project
management activities, it deviates them from concentrating into improving on its productivity
levels and efficiency.

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4. METHODOLOGY

The methodology or the approach to this research was comparing the sales revenues made by
both companies respectively. Data was captured and a comparison was therefore made based
on the captured data. The following is a table showing the revenues made by both companies
for the last consecutive five (5) financial years.

Company A Company B
Year 1 = 10 000 000 Year 1 = 6 000 000
Year 2 = 12 600 000 Year 2 = 6 500 000
Year 3 = 16 500 000 Year 3 = 9 500 000
Year 4 = 17 000 000 Year 4 = 8 000 000
Year 5 = 20 000 000 Year 5 = 10 000 000
4.1. Table 1: Table showing the difference in sales growth trend and accumulation per each
subsequent year in the last five years.

Not only revenues were used as a measurement factor. Employee performance and
productivity were put to consideration as well. Data was captured through the formulation of
a questionnaire for both Company A and B respectively. Senior management and employees
were asked questions based on productivity and performance with an intention to measure the
organizations employee performance and productivity level.

The following table shows the number of people from within the organization who agreed
and disagreed to the questions asked per respective company, with agree weighing the
highest.

Company A:

Questions Agree Disagree

Q1: is project outsourcing working efficient and effective? 50 20
Q2: has employee performance and involvement improved 50 20
through implementing project outsourcing?
Q3: has productivity Improved over the last five years? 60 10
Q4: are there more problems than solutions? 40 60
Q5: is the company meeting set objectives? 60 10
4.2. Table 2: Showing number of people who agree versus those who disagree

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Company B:

Questions Agree Disagree

Q1: is in-sourcing working efficient and effective? 20 50
Q2: has employee performance and involvement improved 40 60
through in-sourcing?
Q3: has productivity Improved over the last five years? 30 60
Q4: are there more problems than solutions? 60 30
Q5: is the company meeting set objectives? 20 60
4.3. Table 3: Showing number of people who agree versus those who disagree

The above data was captured, verified and confirmed to best achieve accurate
results/findings. An analysis of results was conducted to help compare both companies and
recommendations were established to help improve.

5. DISCUSSION OF RESULTS

Company A:

The following is the graphical representation of company A. Showing the sales/revenues

growth trend for the past five financial years.

Graphical representation of sales

25000000

20000000
sales/revenues

15000000

10000000 sales

5000000

0
year 1 year 2 year 3 year 4 year 5
number of years

5.1. Graph 1: Graphical representation of sales for company A.

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Company B:

The following is the graphical representation of company B. Showing the sales/revenues

growth trend for the past five financial years.

Graphical representation of sales

12000000

10000000
sales/revenues

8000000

6000000

4000000 sales

2000000

0
year 1 year 2 year 3 year 4 year 5
number of years

5.2. Graph 2: Graphical representation of sales for company B.

Looking at both graphs for both companies respectively, it is evident that company A had an
increasing growth trend in sales per each subsequent year. This is positive impact from
implementing project outsourcing. However, looking at graph 2, it is as well evident that
company B had problems with regards to keeping the consistency of their sales and of course
yielding the least sales as compared to company A.

Analyzing and evaluating the sales and both questionnaires, it is evident that project
outsourcing is much more lucrative than in-sourcing. Company A which does project
outsourcing, had attained the highest and the best growth trend in sales. Company B had the
least in everything as compared to Company A. As per the questionnaire, more positive
feedback was received from Company A than it was with Company B.

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6. CONCLUSION

After conducting this study and putting together available resources such as data and
information into determining if project outsourcing is better than in-sourcing, it is evident and
well substantiated that project outsourcing is one of the best ways that organizations can use
to execute its project goals and meet nominal organization’s objectives. However, in-sourcing
is neither bad nor better than project outsourcing. In-sourcing requires the most input
resources and cannot guarantee the best outcome of results. Inversely, project outsourcing
requires the least input resources and can partially guarantee the best outcome of results.

7. RECOMMENDATIONS

Based on the outcome of results, I would recommend company B to start introducing project
outsourcing within their organization. Company B needs to understand and know how best to
implement project outsourcing. This would be a very big crucial step into yielding better
sales as possible. Moreover, this will help the organization achieve the best employee
performance and importantly help the organization with meeting its set objectives.

8. REFERENCES

Larson, Eric W., (1952) – Project management: the managerial process / Eric W. Larson,
Clifford F. Gray – 5th ed.

Marty pine, (05 2005), why do companies outsource? : https://www.thebalance.com/why-do-

companies-outsource-2553035

Dine Butorac. (2016) – Outsourcing Project Management: http://www.project-management-

mentor.com/outsourcing-project-management.html

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