Thursday, April 28, 2005


Outsourcing- can be defined as the practice of getting the work done from outside firms which are normally performed within the company. This concept is getting popular among most of the entrepreneurs. The outsourcing may include even the routine tasks such as like payroll processing, accounting etc. often because they can save the resources on these and use them in a better way. Many large companies turn to outsourcing to cut costs. In response, there an entire fleet of industries have evolved to cater the needs of companies who have no other option but to outsource.

But in the race for outsourcing most of the companies do not understand thoroughly the benefits and targets they can achieve through outsourcing. Although it is true that cutting the costs is the most prominent reasons for outsourcing, but it is not the only one. The outsourcing mania is believed to begin in 1990’s. No matter outsourcing is beneficial but in a subtle amount. Even too much outsourcing is not good for the health of the business. There remains a need to have a wise attitude and thinking for identifying which components to outsource in order to have a long term benefits. The following points must be considered for the getting appropriate results from outsourcing:

Reducing the capital costs: Cost has not been the only reasons to get the work done by outsourcing but it is certainly one of the major factors in pushing the firms to get the work outsourced. Outsourcing converts fixed costs into variable costs, releases capital for investment elsewhere in your business, and allows you to avoid large expenditures in the early stages of your business.

Improving the quality: Companies which tend to do the work all by themselves are having a major flaw as to pass the cost incurred on the research and development on to the customer. Else it has been observed that it is better to get the work done from the specialized firm giving it only the requirements and getting the output and that too at a specified cost.
Removing hassles: The hiring and training the labor for the short term work or peripheral projects tend to get too expensive as such there comes the need for putting all Outsourcing lets you focus at the domain where you expertise.

Improving throughput: A company which identifies the components it can outsource and utilize in a better way can improve the efficiency in getting the work done that too at a better pace. It can get the resources instantly and start with its work at any time required. This is extremely useful as the company can save a lot in getting the work done easily from a specialist than wasting months developing it in house.

Focused at the core: Every business needs to remain focused on its core to have a better productivity and overall quality in the product development. The outsourcing process helps the business to focus on the main concern and not divert their attention on the peripherals.

Reduce risk: The business processes can be risky at times and therefore it becomes necessary to get the work done from outside. Markets, competition, government regulations, financial conditions and technologies all change very quickly. So the risk can be reduced by giving the work to the outside firms who are better at getting the work done professionally and managing the risks at a better level and in a better way.