Outsourcing of activities related to the mechine-tractor fleet in agriculture
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Author: Vanya Georgieva
The agricultural structures are under strong pressure motivated by the necessity to cut expenses and by the scarcity of time and human resources on one side and on the other side – by the continuously rising requirements to the quality of the offered products and services. The outsourcing enables the organizations to reduce their operating costs, to concentrate on their key business, to improve the quality of the products and services they offer, to gain access to the best of technologies, to attract first class experts, to share the risks with their partners. The outsourcing in regards to the machine-and-tractors fleet in the agricultural sector can be put into practice in various directions – planning, development of investments projects, operations management and maintenance, etc. The outsourcing differs from consultancy and from the traditional external services contracts. The consultancy just gives recommendations how to achieve the desired results, while in the outsourcing the appropriate group of experts put their own recommendations in practice. In the first case the earnings are made on advice giving, and in the second case remuneration is paid for results, and on top of that responsibilities are assumed for the spending of the funds of the contracting organisation. The traditional contracts for external machinery services usually imply ordering a job which the contracting organisation for some reason is not able to perform alone in that particular moment, but they do not intend to contract external suppliers for that as a whole for a long-term period. An example for such a contract is the contract with an external contractor for a harvesting job which, due to insufficient capacities (insufficient number of harvesters), the contracting organisation can not complete on their own within the favourable agro-technical time. However, if the enterprise decides not deal at all with this type of mechanical services and they sign with another organization a long-term agreement for external services, which is bound by the so called “key factors”, then we can regard this as a case of outsourcing. Such factors could be for example: time of response and completion, costs reduction initiatives, etc. The main feature that distinguishes the outsourcing contract from the usual external service contract is the commitment to results. The economic essence of the outsourcing model involves not only performance of the contracted jobs on the bases of an agreement; it also involves delegating of powers, responsibilities and risks related to the subject matter of the contract.

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