Outsourcing: A Business Strategy
Outsourcing is a business strategy that moves some of an organization’s functions, processes, activities and decision responsibility from within an organization to outside providers. In this competitive edge, companies have a lot of pressure to maintain their focus, flexibility, competence and be competitive in their cost. outsourcing addresses these needs by providing low cost specialized talent which is considered non-core to the business. Outsourcing can be used by management as a strategic tool to restructure the organisation. Outsourcing is subjective to the industry and the purpose for which the same is being undertaken, However across industries outsourcing is primarily undertaken to enable companies to generate better revenue recognition …show more content…
Many businesses embrace outsourcing as a way to realize cost savings or better cost control over the outsourced function. Companies usually outsource to a vendor that specializes in a given function and performs that function more efficiently than the company could, simply by virtue of transaction volume.
Staffing levels. Another common reason for outsourcing is to achieve headcount reductions or minimize the fluctuations in staffing that may occur due to changes in demand for a product or service. Companies also outsource in order to reduce the workload on their employees (freeing them to take on additional moneymaking projects for the business), or to provide more development opportunities for their employees by freeing them from tedious tasks.
Focus. Some companies outsource in order to eliminate distractions and force themselves to concentrate on their core competencies. This can be a particularly attractive benefit for start-up firms. Outsourcing can free the entrepreneur from tedious and time-consuming tasks, such as payroll, so that he or she can concentrate on the marketing and sales activities that are most essential to the firm's long-term growth and prosperity. "What an outsourcing partner really sells is focus," wrote Adam Katz-Stone in Baltimore Business Journal. "In accounting for instance, that is something that typically is seen as necessary but not essential, not the core of the business. So you bring in an outsourcing partner and then you don't have to think about that any more. You can focus your energies on sales, marketing, all the other things that matter
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