Empirical Research of Outsourcing in Lithuanian Small Business Segment

Abstract

In modern business where great competitiveness exists the changes of business surroundings create a situation where wishing to achieve dynamic development of an enterprise you need to search for innovator decisions of effective improvement of business activity. The assurance of effective business activity is connected with the changes of enterprise’s structure. Such changes create the presumption for a simpler administration and execution of the enterprise’s activity, ensures quicker development of the enterprise implementing new popular administration concepts. Outsourcing has been actively used since 1990 as the method of cost reducing; later it transformed into the way of risk reducing, concept of concentration to the main activity; during 30 years of changes it became a modern strategy of enterprises’ activity. Outsourcing is quite a new and not very much investigated phenomenon in Lithuania though in the world it is highly expanded and used to ensure the effectiveness of enterprises’ activities. Having analyzed the aims of outsourcing presented in scientific literature four main aims can be distinguished: strategic, economic, organizational and motivational. Every distinguished purpose can be used depending on the enterprise’s needs, however, they cannot be used to achieve only one objective as having achieved just one aim not always the effectiveness of the enterprise’s activity can be ensured. In scientific literature there are presented many types of outsourcing which are classified according to various specifics of outsourcing and are distributed to types having in mind the extent of application of outsourcing; strategic aims of the use; the place of activity’s execution; the functions defined. Many of authors distinguish business processes and information technologies as the main types of outsourcing; but in other cases different specification of types is given so it can be stated that the presented classifications by the scientists are influenced by the modernity of outsourcing as a means of improving the effectiveness of business; therefore developing business the types can change according to the changes of business environment. Having analyzed outsourcing, some main advantages can be sorted out: the possibility to get the service of high quality and high level; assurance of the enterprise’s flexibility when conditions in market change; the use the experience of other enterprise; the implementation of innovations. However, where there are advantages some disadvantages can be found as well: the risk of loosing information, growing costs, dependence on the other enterprise, dishonesty of partners, the loss of control of the enterprise. In Lithuania small business plays a rather high role in ensuring the country’s economic and social welfare. However, small business companies encounter a lot of problems. Evaluating the possibilities of outsourcing in small business the empirical research showed that of outsourcing is used in small business in Lithuania and highly spread among companies. The main aims of use of outsourcing in small business companies in Lithuania are cost reducing, increase in productivity, and improvement of quality. The benefit received in a short time is: decrease in the need of personnel, concentration on the main activity increases, reduced costs. The benefit received in a long time perspective is: reduce in administration problems, decrease in time needed for enterprise’s management, improvement of product or service quality.