Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
1, pp 87-92, 2017
Copyright © 2017 Trakia University
Available online at:
http://www.uni-sz.bg
ISSN 1313-7069 (print)
ISSN 1313-3551 (online) doi:10.15547/tjs.2017.s.01.016
ABSTRACT
The impact of global economic uncertainty on every business agent is a driver in searching for
alternatives to allocate resources, which allow obtaining the expected return and risk management of the
economic process. With the business model of outsourcing and offshoring, organizations receive
suitable tool for managing company resources and optimizing the quality of their business processes.
The main purpose of this paper is to review the positives and negatives of outsourcing and offshoring,
to summarize some of the factors and the trends determining the formation of Bulgaria as a destination
for this business model. The continuous development of outsourcing and offshoring and the associated
advantages and disadvantages with them can be a factor in the competitiveness of modern business at
regional, national and global level.
Key words: outsourcing business model, offshoring business model, risk transfer.
Undoubtedly, the economy of the new In its essence, this paper does not attempt to
millennium originates and forms the give and overestimate the economic
sustainability of development on the basis of significance of outsourcing and offshoring, but
the vast amount of information and scientific without doubt their supporters emphasize their
knowledge that society has access to and use in potential for efficiency gains, optimization of
its economic activity and social life. Together, costs and tax benefits that are achieved in
they are a driver of entrepreneurship and local, regional and global aspect of the
competitiveness, which is the basis for them to economic agents applying this business
be perceived as “a strategic goal for the models.
European Union to become the most
TEORETICAL FRAMEWORK
competitive and dynamic knowledge-based
Outsourcing is “perhaps as old as commerce
economy in the world” (1), which creates
itself and serves as the foundation for any
conditions and forms priorities “to a state of
relationship where one person performs an
smart, sustainable and inclusive growth” (2).
activity on behalf of another” (3). Therefore,
Thus, knowledge and information as valuable
whenever an independent business agent
resources can be drivers of economic
engages an external contractor or outsourcer to
development and prosperity on a regional,
carry out activities and processes, it is
national and global scale. Therefore, any
outsourcing. When the outsourcing of activities
business model that effectively exploits these
or processes takes place in another country, we
Trakia Journal of Sciences, Vol. 15, Suppl. 1, 2017 87
STOJANOV M.
are talking about offshoring. It is linked to the related expectations of the contracting
cross-border direction, where participants are assignor. Like other business activities today,
economic entities positioned in two sovereign the use of outsourcing is a business standard
states. The main economic incentives derive and is applied in most modern companies. It is
from the opportunity for participants to take an external service that is part of the
advantage of the open systems where the understanding of entrepreneurship, which
resource orientation is attracted by better seems to be an inherent element in the start-up
conditions for carrying out certain activities or of any business. Its popular or widespread use
processes across borders. Reasons for such is related to activities and processes such as
business behavior may be varied but are (6): information provision, distribution,
mainly related to approaching the source of personnel, accounting and legal services,
demand; the proximity to resources that are construction and repair, safety and security,
being used; the lower cost of the resources warehousing, maintenance and cleaning of
used and mainly the labor benefits associated premises, marketing activities, catering, etc.
with the applicable tax system, etc. Hence, each type of outsourcing service is an
element of the normal understanding of a
Traditionally, outsourcing is tied to the transfer modern business that focuses on the creative
of risk and utility between participants that and innovative potential of the core business.
interact on the basis of an agreement reached. Therefore, outsourcing is a strategy to combat
One party transfers certain activities that are wasteful business and low-cost allocation of
conditionally insignificant to its typical scarce resources.
business activity and the other party takes
responsibility for their professional At the same time, this is also a strategy
performance. This relative release is linked to whereby the economic agent improves his
the clear definition of performance position in the business ecosystem in which it
requirements, which in most situations lead to exists. Through such interaction between
an improvement in the quality of the outsourcing participants, reciprocal and
outsourcing activities. Adherence to a precisely rational transmission and resource
defined standard is a source of long-term transformation takes place. As this process of
relationship and satisfaction of the participants. relationship will persists until a certain external
The basis of success of offshoring are the factor does not affect the participants and the
economic effects associated with “labor cost effectiveness of the performance. This
reduction (LCR), … achieving higher quality determines the switching nature of outsourcing
of services and using qualified workforce, … where benefits are formed for both parties, or
the developed infrastructure, reliable the outsourcing arrangement is a “win-win
telecommunication network, economic and strategy”. The main consideration behind this
political stability, legal and tax system” (4). assumption is the elimination of compromises
Furthermore, “in times of crisis - it is defined related to the accomplishment of the assigned
as one of the most adequate management tasks. This is determined by the “outsourcing
approaches for the sustainable development of mechanism that is related to the formulation of
many organizations” (5). Areas of application tasks by the guarantor (client) without
of outsourcing are extremely broad, and can be specifying the approach to their solution” (7),
both a highly specialized activity and typical but unconditionally the implementation should
day-to-day or periodic maintenance and be as rationally and economically as possible
service business operations. Thus, outsourcing effective for both sides. The preconceptions
reveals new opportunities for stimulating behind outsourcing are that client loses
entrepreneurial activity, mainly in the areas of: operational adaptation in the implementation
transport, security, customer service, training, process and the fundamental goal of
maintenance services, canteens, construction, performance is the extreme cost reduction and
healthcare, utilities, facility management, etc. the price of the arrangement. Such limited
At the same time, the competition among understanding links outsourcing as an end-to-
outsourcing companies can trigger end approach and an easy solution to cost
optimization of the cost of the proposed castration that is achievable in the vicious
performance of the activities, but circle of systemic compromise solutions and
improvements in quality are much more the pursuit of success in the short term. Then,
serious. The latter is a projection of the behind successful outsourcing, priority must be
economic motivation of the contractor to given to the innovative implementation of the
reproduce for the longest possible period his activities and processes that meet defined
contractual relationship, which is the objective quality criteria. This means that modern
basis for the scale of the activities and the outsourcing is an effective solution for
Figure 1. Position (the rank is in the circle) and structure of Global Services Location Index of Bulgaria in the
ranking of A. T. Kearney for 2005, 2007, 2009, 2011, 2014 и 2016. Source: A. T. Kearney Global Services
Location Index Reports, 2005, 2007, 2009, 2011, 2014, 2016, <https://www.atkearney.com/strategic-it/global-
services-location-index> (29.04.2017).
Over the years, changes in GSLI structural regional dimension of its geographic location
elements for Bulgaria indicate which factors in the heart of the Balkans (as a relatively
are the forces for bringing the country to the stable macroeconomic framework and political
top of the global ranking. On first place of environment), the existence of a labor factor in
importance are the conditions of the business certain sectors with appropriate skills and
environment and the second place is the competencies, improvement of the quality of
financial attraction of the country. The first infrastructure (transport corridors, quality of
group of business environment factors account telecommunication services provided, etc.) and
for 30% of the overall assessment and is the availability of adaptation to the global
associated with its relative stability in the influences of the legislation in the field of
Trakia Journal of Sciences, Vol. 15, Suppl. 1, 2017 91
STOJANOV M.
intellectual property protection. The second outsourcing: A perspective for managers
group of financial attractiveness factors and decision makers, IGI Global, pp. xxxii-
account for 40% of the overall assessment of lix, 31.07.2009.
the index and are directly expressed by the 4. Harizanova, M. Offshoring of Human
relative attractiveness of the Bulgarian Resources - a Factor for the Formation of
economy in terms of compensation for the the World Labor Market. // Economic
labor factor, stimulating taxation for business Alternatives, UNWE, 5:11-25, 2008 (in
units and the stability of the national currency Bulgarian).
within the context of the currency board 5. Harizanova, M. Outsourcing: Role,
framework. characteristics and directions of application.
Scientific papers of UNWE, Sofia, 2:7-39,
CONCLUSION 2012 (in Bulgarian).
In such a situation, “overall improving of the 6. Bozhinova, K. Challenges to the
conditions for outsourcing in the country will Commercial Enterprise in the Use of
positively influence the competitive Outsourcing. Collection of papers from the
environment” (7) and will have a positive International Scientific Conference
effects on the whole economy and society. At “Regional and Global Dimensions of
this stage, Bulgaria has the real opportunity to Trade”, Varna: Science and Economics, pp.
be able to derive the positives from this 467-476, 2013 (in Bulgarian).
business phenomenon and to position itself as 7. Zhelyazkova, D. Requirements for
an attractive destination for outsourcing and application of outsourcing in distribution.
offshoring on a regional and global scale. “Izvestiya” Journal of the University of
Economics – Varna, 1:108-123 2011 (in
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