Answer:
A firm can acquire temporary capacity by subcontracting work during peak demand periods. Subcontracting, however, has several pitfalls. First, it may be expensive; second, it risks opening the client’s door to a competitor. Third, it is often hard to find the perfect subcontract supplier, one who always delivers the quality product on time. However, of late outsourcing has become a complete business policy and cost of operations may be cited as the main reason.
A firm can acquire temporary capacity by subcontracting work during peak demand periods. Subcontracting, however, has several pitfalls. First, it may be expensive; second, it risks opening the client’s door to a competitor. Third, it is often hard to find the perfect subcontract supplier, one who always delivers the quality product on time. However, of late outsourcing has become a complete business policy and cost of operations may be cited as the main reason.