The case for a national outsourcing initiative for any country drives from the fact that, globally, outsourcing is gaining momentum and is a source for enhancing revenue generation, particularly in developing economies. In its most common form, outsourcing occurs anytime one enterprise makes a contract with another to perform a process that is normally done internally by the first enterprise.
Outsourcing took a major leap forward in the late 1960s when firms began to use data transfer to outsource their payroll administration. Today, India, China and other South East Asian economies have made outsourcing an important emerging and key sector in the development of their economies.
In the drive for economic returns and development of the economy in any country, the government has recognized the growing importance of the outsourcing economy in the wealth of nations. The belief today is that some countries has the basic ingredients and is at the stage where it can now develop a vibrant outsourcing sector.
On the contrary, a precise definition of outsourcing or subservicing has yet to be agreed upon. Thus, the term is used inconsistently. However, outsourcing is often viewed as involving the contracting out of a business function; one previously performed in-house – to an external provider. Of recent concern is the ability of businesses to outsource to suppliers outside the nation, sometimes referred to as offshoring or offshore outsourcing. In addition, several related terms have emerged to grasp various aspects of the complex relationship between economic organizations or networks, such as nearshoring, multisourcing and strategic outsourcing. Almost any conceivable business practice can be outsourced for any number of stated reasons. The implications of outsourcing objectively and subjectively vary across time and space.
Here are some of the related reasons that engender outsourcing as a panacea not only for large corporations but also for small businesses. Some organizations outsource to;
I. Control Capital Costs: Cost-cutting may not be the only reasons to outsource, but it is certainly a major factor. Outsourcing converts fixed costs to variable costs, releases capital for investment elsewhere in your business, and allows you to avoid large expenditures in the early stages of the business. The benefit of outsourcing as it pertains to controlling capital costs also make your firm more attractive to investors. This is owing to the fact that it allows you to pump more capital directly into revenue-producing activities.
II. Increased Efficiency: Some company that does everything themselves have much higher research, development, marketing, and distribution expenses. At the end of the day, all of which must be passed on to customers. Invariably, an outside provider’s cost structure and economy of scale can give your firm an important competitive advantage.
III. Reduce Labour Costs: The issue of hiring and training of staff for short-term or peripheral projects can be very expensive and temporary employees do not always live up to expectations. Here, outsourcing lets you focus your human resources where you need them most.
IV. Start a new Project Quickly: A good outsourcing firm has the resources to start a project right away. At the same time, handling the same project in-house might involve taking weeks or months to hire the right people, train them, and provide the support needed. Subsequently, if a project requires major capital investments (such as building a series of distribution centers), the startup process can be even more difficult.
V. Focus on your Core Business: Every business has limited resources, and every manager has limited time and attention. Outsourcing can help your business to shift its focus from peripheral activities toward work that serves the customer, and it can help managers set their priorities more clearly.
Summarily, outsourcing or subservicing often refers to the process of contracting to a third-party. While outsourcing may be viewed as a component to the growing division of labour encompassing all societies, the term did not enter English-speaking lexicon until the 1980s. More so, its applications are more felt now in developed countries than in the undeveloped countries. Since the 1980s, transnational corporations have increased subcontracting across national boundaries. Readers what benefit are there when organizations outsource and what is your view to outsourcing? It will be seen on your comment.
http://wwwinformationage.blogspot.com
Outsourcing took a major leap forward in the late 1960s when firms began to use data transfer to outsource their payroll administration. Today, India, China and other South East Asian economies have made outsourcing an important emerging and key sector in the development of their economies.
In the drive for economic returns and development of the economy in any country, the government has recognized the growing importance of the outsourcing economy in the wealth of nations. The belief today is that some countries has the basic ingredients and is at the stage where it can now develop a vibrant outsourcing sector.
On the contrary, a precise definition of outsourcing or subservicing has yet to be agreed upon. Thus, the term is used inconsistently. However, outsourcing is often viewed as involving the contracting out of a business function; one previously performed in-house – to an external provider. Of recent concern is the ability of businesses to outsource to suppliers outside the nation, sometimes referred to as offshoring or offshore outsourcing. In addition, several related terms have emerged to grasp various aspects of the complex relationship between economic organizations or networks, such as nearshoring, multisourcing and strategic outsourcing. Almost any conceivable business practice can be outsourced for any number of stated reasons. The implications of outsourcing objectively and subjectively vary across time and space.
Here are some of the related reasons that engender outsourcing as a panacea not only for large corporations but also for small businesses. Some organizations outsource to;
I. Control Capital Costs: Cost-cutting may not be the only reasons to outsource, but it is certainly a major factor. Outsourcing converts fixed costs to variable costs, releases capital for investment elsewhere in your business, and allows you to avoid large expenditures in the early stages of the business. The benefit of outsourcing as it pertains to controlling capital costs also make your firm more attractive to investors. This is owing to the fact that it allows you to pump more capital directly into revenue-producing activities.
II. Increased Efficiency: Some company that does everything themselves have much higher research, development, marketing, and distribution expenses. At the end of the day, all of which must be passed on to customers. Invariably, an outside provider’s cost structure and economy of scale can give your firm an important competitive advantage.
III. Reduce Labour Costs: The issue of hiring and training of staff for short-term or peripheral projects can be very expensive and temporary employees do not always live up to expectations. Here, outsourcing lets you focus your human resources where you need them most.
IV. Start a new Project Quickly: A good outsourcing firm has the resources to start a project right away. At the same time, handling the same project in-house might involve taking weeks or months to hire the right people, train them, and provide the support needed. Subsequently, if a project requires major capital investments (such as building a series of distribution centers), the startup process can be even more difficult.
V. Focus on your Core Business: Every business has limited resources, and every manager has limited time and attention. Outsourcing can help your business to shift its focus from peripheral activities toward work that serves the customer, and it can help managers set their priorities more clearly.
Summarily, outsourcing or subservicing often refers to the process of contracting to a third-party. While outsourcing may be viewed as a component to the growing division of labour encompassing all societies, the term did not enter English-speaking lexicon until the 1980s. More so, its applications are more felt now in developed countries than in the undeveloped countries. Since the 1980s, transnational corporations have increased subcontracting across national boundaries. Readers what benefit are there when organizations outsource and what is your view to outsourcing? It will be seen on your comment.
http://wwwinformationage.blogspot.com
