Outsourcing is the act of one company contracting with another company to provide services that might otherwise be performed by in-house employees. Often the tasks that are outsourced could be performed by the company itself, but in many cases there are financial advantages that come from outsourcing. Many large companies now outsource jobs such as call center services, e-mail services, and payroll. These jobs are handled by separate companies that specialize in each service.Outsourcing is the contracting out of a business process, which an organization may have previously performed internally or has a new need for, to an independent organization from which the process is purchased back as a service.
With the economy driving towards globalization, many companies are hard bound to gain a competitive advantage by cutting their costs, optimizing efficiency, and great customer service. So how do you go about doing that in a limited time? If you are looking for a one-word answer then offshore development or outsourcing is your gateway to success. Outsourcing software development has proven to be a great success for many companies worldwide. Globalization is forcing a lot of company's to constantly improve their competitive edge. Outsourcing will reduce your internal costs while allowing your company to focus on its core competencies. In a fast moving technological world, it is unlikely that your company will be able to design a whole spectrum of technical software.
Swiftness and Expertise: Most of the times tasks are outsourced to vendors who specialize in their field. The outsourced vendors also have specific equipment and technical expertise, most of the times better than the ones at the outsourcing organization. Effectively the tasks can be completed faster and with better quality output
Risk-sharing: one of the most crucial factors determining the outcome of a campaign is risk-analysis. Outsourcing certain components of your business process helps the organization to shift certain responsibilities to the outsourced vendor. Since the outsourced vendor is a specialist, they plan your risk-mitigating factors better.
Reduced Operational and Recruitment costs: Outsourcing eludes the need to hire individuals in-house; hence recruitment and operational costs can be minimized to a great extent. This is one of the prime advantages of offshore outsourcing.
There are many reasons that companies outsource various jobs, but the most prominent advantage seems to be the fact that it often saves money. Many of the companies that provide outsourcing services are able to do the work for considerably less money, as they don't have to provide benefits to their workers and have fewer overhead expenses to worry about. Depending on location, it may also be more affordable to outsource to companies located in different countries Outsourcing also allows companies to focus on other business issues while having the details taken care of by outside experts. This means that a large amount of resources and attention, which might fall on the shoulders of management professionals, can be used for more important, broader issues within the company. The specialized company that handles the outsourced work is often streamlined, and often has world-class capabilities and access to new technology that a company couldn't afford to buy on their own. Plus, if a company is looking to expand, outsourcing is a cost-effective way to start building foundations in other countries.
In the 1950s and 1960s, certain business practices became popular that made outsourcing a necessity. Companies started to focus on having a large business that could directly control all other aspects of their business. Companies looked to expand their businesses as much as possible. As a result, corporations became bloated as they expanded overseas. In the 1970s and 1980s corporations decided that they needed to either cut down or refocus their energies on the parts of their businesses that they were good at. They found that they couldn't stay flexible if they were trying to manage everything under the sun. As a result, outsourcing grew in popularity. Outsourcing was the perfect solution for corporations that were trying to expand globally. The leaders could focus on what made their businesses special, and they were able to send other parts of their business management to other locations.