outsourcing

Outsourcing is the process where a company uses a third party to perform work that is normally performed in-house. Outsourcing can be used for many different types of activities such as payroll, accounting, sales, distribution or computer programming. In recent years, offshore outsourcing has grown in popularity as companies have discovered that foreign labor is cheap, efficient and the level of English proficiency adequate to facilitate business transactions.

The most obvious benefit of outsourcing is that it can save money. This is not necessarily the most important consideration. Often, companies are stretched for resources and are forced to make strategic decisions about where to best deploy human capital. The opportunity cost of doing tasks that consume time can take focus away from core business activities. Outsourcing can be used effectively to take charge of tasks that detract from business performance.

Outsourcing can also be used effectively in instances where a company is forced to consider hiring and training additional staff. The downtime in selecting a candidate, grooming them for businesses processes and turning them into productive workers is both time intensive and costly. This is amplified in situations that require the additional purchase of equipment such as computer workstations or expensive software. Outsourcing to a competent company that can immediately commence producing the desired solution can be a superior alternative.

In some markets, lead time to market can mean the difference between establishing a competitive advantage or becoming a market laggard. This is particularly evident in technology companies that require fast turn around time on application development. Many fortune 500 companies in the US have discovered that outsourcing programming services to companies in India can produce a superior business outcome. This eliminates the need to establish infrastructure, maintain staff and operate ongoing training and development programs. This also frees up resources that can be deployed for growing other important areas of the companies business.