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Information technology
. This reduces the need for middle managers to process information. 
(b) 
Empowerment
. Many organisations, especially service businesses, are keen to delegate authority 
down the line to the lowest possible level. Front-line workers in the operating core are allowed to 
take decisions, in order to increase responsiveness to customer demands. 
(c) 
Economy
. Delayering reduces managerial/supervisory costs. 
(d) 
Fashion
. Delayering is fashionable: if senior managers believe that tall structures are inherently 
inflexible, they might cut the numbers of management levels. 
This topic was also covered in Chapter 2, when discussing the impact of technology on the organisation. 
2.15 Outsourcing and offshoring
Outsourcing, as explained in Chapter 2, is the contracting out of specified operations or services to an 
external vendor. Outsourcing impacts organisation structure by removing the outsourced activity from the 
organisation. 
A related concept to outsourcing is offshoring. Whereas outsourcing involves an organisation sending 
work to an external organisation, offshoring involves sending work overseas. Work sent overseas may 
still be done within the organisation; for example, if a UK bank sets up its own call centre in India, that 
is offshoring but is not outsourcing. If, on the other hand, a UK business contracts with an external call 
centre based in India to deal with customer service telephone enquiries, that is both outsourcing and 
offshoring. 
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Offshoring is often used by organisations who want to make use of cheaper labour in overseas markets. 
The disadvantages of offshoring come from possible cultural and language barriers and a loss of 
customer focus if the offshoring company no longer has day-to-day contact with its customers. 
2.16 Shared services approach
Under a shared services approach, a single service centre is established to provide a support function 
across an organisation. Previously, the service may have been provided in a more fragmented way.
The shared services business unit, created within the company, is accountable for delivering the service 
to agreed service levels. Although the service provider is part of the organisation, the relationship it has 
with other parts of the organisation is similar to that of an external service provider. The shared services 
unit has the mindset of a business and views the rest of the organisation as their customers. 
The shared services approach aims to enable better use of resources across the organisation, resulting in 
lower costs but with the protection of agreed service levels.
IT and HR are two functions often seen as suitable for the shared services approach, but the approach 
could be applied to a wide range of activities. 
The disadvantages to the shared services approach are that services are likely to be less tailored and 
more generic and also that there is less job diversity within the organisation.