The Benefits of Outsourcing: A Boon for Everyone

  • September 16, 2011
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Historically, the global market has relied on the traditional business transaction involving only two parties: the manufacturers and the consumers. Guided by various concepts that continuously develop through the years, productivity depended upon the business operations of its company, which performs both core and noncore functions. With the advent of modernization, these concepts gave way to even more strategic methods that make huge cost savings possible and multiply enormously the production capacity of the global workforce. At present, technological advances have led to an evolution of the business world, one powered by outsourcing.

Outsourcing has indeed demonstrated its countless benefits to the whole business industry. It has created a certain bandwagon society in the market. As more companies find it not just as a cost-saving method but as a strategic technique, their competitors follow the trend. But outsourcing as a boon for everyone remains a question for some as skeptics continue to throw criticisms at it. Nonetheless, its manifold benefits cannot be easily ignored.

Probably the most popular advantage of outsourcing over any other business strategy is its guaranteed cost-saving capabilities. Aside from reducing manufacturing overhead cost, companies are able to eradicate expenses associated with employee overtime, hiring and layoffs. It also reduces training expenses and decreases the company’s payroll taxes connected with unemployment and workers compensation expenses. These cost-saving measures gives way for increased profitability and savings that can be allotted to the development of their product quality.

Outsourcing brings numerous production benefits for companies. It enables companies to meet peak production requirements without necessarily employing more workers. Outsourcing also lets the companies choose from a variety of outsourcing firms specializing in different fields. Since the service providers will be the one responsible for capital equipment and machine maintenance, companies can gain access of effective facilities without spending additional cost. In addition to that, outsourcing allows companies to focus on their core functions while the service providers take care of the noncore applications and processes like human resources and data entry.

According to Martyn Hart, chairman of the National Outsourcing Association, businesses can produce more savings by finding a specialized service supplier. Doing so gives them more time to concentrate on their core competencies. Richard Fifield, on the other hand, said that outsourcing creates flexibility. It aids companies to adapt to the changes in today’s complex market conditions.

Flexibility, cost-savings, increased core competencies—-what more? Certainly, the global village can expect more of outsourcing. With these present innovations in today’s market, it is no surprise that outsourcing is a great help in any field, from the simplest task of filing information to the more complicated responsibilities of motivating the workforce in the human resources department. Contrary to the criticisms of distrust and mismanagement, outsourcing is more than just a method or a strategy. It is a global innovation set to comprise the world’s largest contributing industries in the economic growth of the global market.

Sources:

o http://www.icaew.co.uk/library/index.cfm?AUB=tb2i_71110
o http://www.thearcolc.org/Progress/outsourcing.htm

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