The Benefits of Outsourcing
Overview
There are many organizations from different parts
of the world are outsourcing work these days. Businesses in the
developed countries regularly go for offshore outsourcing, because of
the lower labor costs.
Outsourcing is also beneficial to less developed
countries like China, India, Philippines as well as those countries
of Eastern Europe. Incoming work of outsourcing creates increased
wages, job opportunities, education and a higher quality of life for
these countries.
How Outsourcing Works?
At first, outsourcing was simply seen as a way to
cut labor costs. Processes like manufacturing and assembly used to be
managed in overseas locations, where the costs were significantly
lower. Wages and operation costs were also lower in these locations.
However as outsourcing continued in the market, companies identified
several advantages. These include having expertise from different
streams being accessible for specialized work, a larger number of
workers and more flexibility. Let us discuss these options one by
one.
Lower Operation Costs
In any business cost reduction is still the most
important reason why a company considers outsourcing. Tasks that are
costlier to get done in-house are allocated to service providers who
offer the same services at a lower price. For example, let us take a
task that requires specialized training in some software. It might be
cheaper for a company to outsource this task than training staff
in-house. It does cost the company to hire an expert team fromoutside, but since this team accomplishes the task much faster and
more efficiently than an in-house team, the long term benefits would
be with hiring.
Enhance Competitive Advantage
Outsourcing provides companies with more
opportunities to develop competitive strategies for the global
market. It also helps to increase product quality, lower costs for
the firm and/or consumer or leverage the quality to cost ratio. There
are some situations where the quality goes down a little along with
lowering costs. Even this situation is beneficial, as the overall
productivity increases.
Provide Access to Experts
Having access to experts in any field not only lowers the long
term costs, but the company can also explore new avenues and take up
more different kinds of work specialization. This in turn helps the
company to enjoy prosperity through the changing times today.
Gives More flexibility
Provides More Resources for Core Business
Activities
With outsourcing, business organizations or companies can free up their
capital funds and time to focus on core business activities. The
management can get administrative or other ancillary jobs done
through the outsourcing vendor.
Access to Latest Technology
When a business organization or a company ties up with an outsourcing vendor,
it acquires the access to the latest technology and equipment at the
vendor's disposal, without having to purchase these equipments and
technologies. So that contributes to lower the operation costs.
