ITIL 4 Foundation Practice Exam

What is the purpose of outsourcing in an organization?

1. To decrease overall operating costs

2. To eliminate all internal processes

3. To hire more full-time staff

4. To manage all aspects of production

The correct answer is: To decrease overall operating costs

The purpose of outsourcing in an organization primarily revolves around enhancing efficiency and reducing costs. By outsourcing specific functions or processes to third-party providers, organizations can often take advantage of lower labor costs, specialized expertise, or more efficient operations that may not be available in-house. This strategic approach allows businesses to focus on their core competencies, as they can allocate resources and personnel to more critical tasks that drive value. Outsourcing enables organizations to maintain flexibility and scalability as well. When demand fluctuates, companies can ramp up or scale down operations without the burden of permanent staffing or overhead. This dynamic helps in managing overall operating costs more effectively. As a result, many companies adopt outsourcing as a way to streamline their operations and free up capital, which can be reinvested in other areas of the business. The other options do not accurately reflect the primary purpose of outsourcing. For example, eliminating all internal processes is impractical and would not support a balanced business approach; instead, outsourcing is about delegating certain functions while retaining strategic oversight. Similarly, hiring more full-time staff typically contradicts the outsourcing objective, which often seeks to minimize the workforce in certain areas. Finally, managing all aspects of production falls outside the common goal of outsourcing, as it usually involves delegating