Outsourcing

Outsourcing

Outsourcing is a kind of practice in which organizations try to reduce their cost by transforming some portion of their work to outside suppliers instead of doing it on their own. For instance, companies in developed countries are outsourcing their customer services to call center companies based in India. In some cases, organizations from developed nations move their production plants to cities in China because of its low cost labor and taxes which make the latter attracted place to invest.

The reason for this form of business practices is many and based on the strategic thinking outlook of an organization. The global economy, unpredictable market dynamics and economic uncertainty are forcing companies to save cost in order to compete effectively in modern day business environment. Furthermore, the high cost of doing business and their own countries forces organizations to look for an alternative that can help them reduce their cost and increase their chances to succeed in the global environment. The rising cost of energy, taxes, and strict regulations causes companies from developing companies to move to countries such as china and India since these countries provide financial incentives to these companies in the form of cheap labor and low taxes. Advantages of Outsourcing Outsourcing provide an opportunity for companies to spend more time on their core business process, and send the less important work to other companies. These forms of strategic thinking help them stick with their core specialties, and save them from wasting time on something which is not relevant to their main objectives. It also saves the organization from investing in the latest technology; infrastructure and human resources needed for a particular task, and let the outsourcing business handle these roles. Furthermore, it provide organization with a comparative advantage since the outsourcing partners comparatively has more ...