Why Outsource?

  • September 4, 2011
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In this fast-paced era of technology and globalization, more and more complexities are encountered by the business sector of the global society. Demands continue to increase and competition becomes more of a rat race. Business tasks are getting complicated and intensified as technological advances require companies to handle multiple responsibilities.

However, they found an essential way of dealing with the convolutions brought by modernization. For years, lots of companies of varied fields have accepted the concept of outsourcing. Fundamentally, outsourcing is a strategic method of handling responsibilities without completely depending on the original company’s resources. It all started in the 1940’s when American textile firm owners decided to use a third party to manage a part of their business functions. Later in the 60’s, a company offered service to furniture manufacturers and designers using their expertise in information technology.

Years after, outsourcing has branched into different varieties performing aggregate functions. These include engineering design, data analysis, software development, call centers, information technology operations and animation. As outsourcing becomes more and more popular in business and management, it has showcased manifold benefits to both the outsourcer and the service provider. The mere fact that multinational companies that rely on outsourcing increase conveys that outsourcing has proven its success. Microsoft and Oracle, for instance, have aggravated outsourcing and utilized the savings for investment and domestic payrolls.

Aside from developing product quality, outsourcing costs lower substantially. This is evident specially if a company outsources from an overseas firm where labor costs are more economical than the labor costs in their home markets. Since outsourcing allows for cost-competitiveness, productivity is increased. In effect, the global economy in aggregate benefits.

Moreover, advantages are perceived not only in outsourcer markets but in outsourced countries as well. Though labor costs in these countries are rationally lower than in developed countries, outsourcing jobs are considered high paying and worthwhile, with respect to their cost of living. Hence, outsourcing fuels outsourced countries toward economic growth. Also, advantages on the political aspect are seen out of outsourcing. According to Thomas Friendman, countries that are focused in their economic growth are much less likely to tolerate war. It is impossible for these countries to go to war with nations that contribute to their economies.

Likewise, outsourcing focuses companies on their major business goals, since the difficult segments if their business functions are handled by a third party. Outsourcer companies also get to share risks with the outsourced firms. Furthermore, outsourcing helps promote globalization because it enable companies to gain access to world-class capabilities.

By the virtue of the countless opportunities and advantages outsourcing boasts of, it is no surprise that it is recognized as one of the fastest growing industries in the world, particularly business process outsourcing. No one knows what more benefits it may present in the future. Almost every company who considered outsourcing asked the question “why outsource?”. Yet, in

the end, they all found the answer. Simply put, the answer lies in the question itself. Why outsource? Why not?

Sources:
1. http://www.outsourceit2philippines.com/index.htm
2. http://www.bambooweb.com/articles/o/u/Outsourcing.html
3. http://en.wikipedia.org/wiki/Outsourcing#Benefits_of_Outsourcing

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