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Outsourcing, or the allocation of specific aspects of a corporation to a business entity specializing in those areas, has become such an integral part of a company`s organizational structure that few question outsourcing`s long-term viability. Two recent studies on this topic are no exception; both focus on ways in which outsourcing can be improved. Each, for the most part, discusses different aspects of outsourcing. Yet, there is one area in which the recommendations of both theories overlap somewhat.

Peavy chiefly discusses ways in which companies can mitigate the potential negative effects of confidential information reaching competitors. Presently, when a corporation outsources even a small operational function, it must share information pertaining to this function. In other words, the more of its operation a company entrusts to another business entity, the more confidential information that company will have to release. According to Peavy, one way to minimize the negative consequences should any of that information fall into a competitor`s hands is to impose stronger penalties on any business entity entrusted with such information, should it divulge that information. However, Peavy is concerned mostly with exploring the effect of increasing the severity of penalties for any one instance of leaked information, and he devotes only one chapter to an existing structural check on such "information leaks": as a company specializing in outsourcing assumes more clients, its legal liability will increase with each company that becomes a client, an effect, he notes, that becomes more conspicuous the more a company diversifies.

Morgan, on the other hand, looks at those business entities that performed the outsourced work. As such entities grow, their ability to provide specialized services to a specific client diminishes. Since, like most business entities, they are driven to grow profits, often doing so by diversifying, the needs of a specific client are often subordinate to this larger goal. Morgan`s aim is to educate corporations engaged in outsourcing so that they choose a firm that focuses on providing one service. This view, however, is somewhat shortsighted, since the long-term trajectory of a company is not always clear and a firm may end up diversifying.

In this regard, there is a curious overlap between the two studies: in some ways both see problems with diversification, Peavy focusing on the liability and Morgan the diminishment in quality of the services rendered. Yet, it is important to note that Peavy focuses on how diversification negatively affects a company providing services to companies outsourcing, whereas Morgan focus on how the latter is negatively impacted.