Reason For Outsourcing

1267 Words6 Pages

Outsourcing means an organisation get service from a third party. With regards to information technology, outsourcing can include anything from outsourcing all management of IT to an IBM or HP to outsourcing a very small and easily defined service, such as disaster recovery or data storage, and everything in between.
In 1776, Adam Smith, formulates theory of competitive advantage extracting the notion of outsourcing. In 1930, Textile industry work is outsourced to England. In 1960, became common to outsource tasks with massive information handing such as data processing. In 1970, computer companies outsource their payroll. In 1980, accounting, services, payroll, billing & word processing outsourced. In 1989-outsourcing is formally identified …show more content…

Outsourcing is a long-term, result-oriented business relationship with a specialized service provider. The outsourcing option has two main types, first reason is to buy ready-made solutions & second one is to outsource the total portal development. (Lacity and Willcocks 1998, page 364). Common another reason is at first, a major reason for Outsourcing is lower costs. Outsourcing involves transaction costs, which make outsourcing cost more than performing the activities ourselves. Lower operational and labour costs are among the primary reasons why companies choose to outsource. Secondly, Outsourcing enables companies to tap in to and leverage a global knowledge base, having access to world class capabilities. Thirdly, Freeing up internal resources that could be put in to effective use for other purposes is also one of the primary benefits realized when companies outsource or offshore. Finally, by delegating responsibilities to external agencies companies can wash their hands off functions that are difficult to manage and control while still realizing their …show more content…

Secondly, Knowledge process outsourcing (KPO) of core business activities, which often is competitively important of a company’s value chain. Third point is that Legal process outsourcing (LPO) refers to the practice of a law firm obtaining services from an outside law firm company. Another types is Recruitment process outsourcing (RPO) is a form of business processes outsourcing where an employer out sources all of recruitment activities to an external service provider. Finally, Engineering process outsourcing (EPO refers global consulting & outsourcing services providing end-to-end Services in the areas of Engineering & Technical process outsourcing. (Quinn & Hilmer 1889 page

Open Document