Management Information System (MIS) Practice Exam

What is the relationship between outsourcing and telecommunication costs?

1. Increase in telecommunication costs promotes outsourcing.

2. Decrease in telecommunication costs promotes outsourcing.

3. Telecommunication costs do not impact outsourcing.

4. High telecommunication costs eliminate outsourcing opportunities.

The correct answer is: Decrease in telecommunication costs promotes outsourcing.

The statement that a decrease in telecommunication costs promotes outsourcing is correct because lower telecommunication costs make it more feasible and attractive for companies to engage in outsourcing. When businesses can communicate efficiently and cost-effectively with partners or service providers located in different geographical locations, it reduces the barriers to outsourcing. As telecommunication costs decline, companies are more likely to seek services from external providers, as they can manage operations over long distances without incurring substantial costs. This increased connectivity allows businesses to leverage external expertise, access specialized skill sets, and enhance their operational efficiency, ultimately driving the trend toward outsourcing. In contrast, high telecommunication costs can hinder the ability to effectively manage outsourced relationships, as they can significantly increase the operational costs associated with managing communication and coordination. Therefore, the relationship between outsourcing and telecommunication costs highlights the importance of cost-effective communication channels in facilitating outsourcing arrangements.