In this particular guide, I’m going to be talking all about outsourcing, how it works and how it is useful to us.
Outsourcing happens to be the business practice of hiring someone outside a company to perform some services and even create goods which are traditionally performed in the house, by the company’s own employees and the company’s staff. Outsourcing happens to be a practice that is usually undertaken by companies because they want to cut some costs. You can actually affect a huge range of jobs. It can include customer support and back-office, as well. Sometimes, some companies have known to outsource the manufacturing process as well. Outsourcing was one of the first recognised strategies in 1989, and it became a very essential part of business economics through the 1990s, and it continues to be a tradition even now.
The very practice of outsourcing is subject to a lot of controversy in a lot of countries. The people who are opposed to it have actually argued that it causes the loss of some domestic jobs. This would be included in the manufacturing sector. The supporters have said that it creates an incentive for all kinds of companies to allocate some resources where it is most effective. Companies make use of outsourcing practises in order to cut some labour cost and also they would be interested in cutting salaries, overhead, equipment, technology and personnel.
Outsourcing is something that has been used by companies because they will want to focus on the core aspects of the business, instead of shelling out money, but it is not required. On the downside, communication between the outside providers and the company can be really hard, because of security threats as well. Outsourcing is something that can provide outside parties access to the company’s sensitive data.
One of the most remarkable advantages of outsourcing is that it saves a lot of cost and time. A manufacturer can actually outsource a lot of jobs. For example, a manufacturer of personal computers may actually buy some very internal components for its machines from other companies so that he can save on production costs. Another great real-world example is that Apple Inc. actually outsources some jobs to other companies, so that they can save time and money when they are manufacturing their devices.
Another spectacular example is that a foreign company can actually end up hiring people from other countries, so they can save costs, because salary and payment habits can be lower in the country where they’re hiring individuals. This happens a lot between western countries and India. A lot of jobs are actually outsourced from foreign countries to Indians. I feel that outsourcing is a good thing, because it definitely gives a lot of people jobs and an income.