Future Business Leaders of America (FBLA) Business Management Practice Test

Why do many businesses outsource their Management Information Systems?

1. To improve software quality

2. To reduce costs and retain expertise

3. To eliminate data entry

4. To centralize operations

The correct answer is: To reduce costs and retain expertise

Many businesses choose to outsource their Management Information Systems primarily to reduce costs while retaining access to specialized expertise. Outsourcing enables companies to leverage the knowledge and experience of external service providers who are often experts in the latest technologies and practices. This helps organizations focus on their core competencies and strategic goals without having to invest heavily in infrastructure, staff training, or software development. Additionally, outsourcing can lead to significant savings related to labor, maintenance, and technology upgrades, as the external provider typically absorbs these expenses. This allows businesses to benefit from high-quality management information systems without the burden of managing these resources in-house. The other options, while they may have some relevance in isolated cases, do not capture the primary motivation behind outsourcing. For instance, while improving software quality can be a resultant benefit, it is not the main reason. Eliminating data entry may be a software feature rather than a driving factor for outsourcing. Centralizing operations typically refers to consolidating resources and functions, which does not align with the decentralized approach that outsourcing represents. Thus, the focus on cost reduction and access to specialist knowledge distinctly justifies why many businesses opt for outsourcing in this area.