subject: Advantages Of Outsourcing Services For Business [print this page] Outsourcing is a process of an existing business function of an organization to an independent organization, and ceasing to perform that function or process internally as a service. Though the process of purchasing a business function instead of providing it internally is a common feature of any modern economy business. Outsourcing became popular in America near the turn of the 21st century. An outsourcing deal may also involve transfer of the employees involved to the outsourcing business partner.
Outsourcing process basically works as firstly customers inform the outsourcing provider about their requirements and suggest them how they want this work to be done. Customers authorize the developers to operate and redesign the processes to ensure the efficiency of the work.
Reason
Now a days the major reason for companies to outsource include cost reduction and cost savings it is because the ability to focus on its core business, access to more talent and experience, and increased profits within a short span of time. In modern economy the most famous software companies are able to focus their money and resources more towards improving the core aspects of its business when they outsourced.
Advantages of Outsourcing Services:-
Outsourcing Companies are able to provide services and products to consumers at a cheaper price while still having a large margin for profit. This profit margin is benefits for the both the software company as well as for the customers. When a company ready to provide services to the client on a cheaper prices it will lead to an increase in a company economy/capital. Although Incase if any company lost one of his client jobs opportunity it will hurt the company perception as well as the companys economy because more people become unemployed. Even cheaper price allows customers to purchase more products and services which helps to rebuild an existing economy of the company.
1)Managerial Process:- The main physical distance between the high level management the production employees often requires a change in management process as inspection and feedback may not be direct and frequent as in an internal process. Now the software development companies requires the assimilation of new communication method through Voice calls through IP and Instant Messaging will reduce the development time and cost through which a company can earn a huge amount of money within a short span of time which will help to rebuild an existing economy of company.
2)Security:- Outsourcing of a company is responsible for the actions of all their staff and liable from their actions. Security issue that is criminal activity whether it is by employees or by the staff of the company. However, it can be disputed more likely when outsourced involved.
3)Core Activities:- It is the centre stage of the outsourcing for the software development companies. Outsourcing non-core activities such as administration and back end operations work helps to put the focus on the core functionality of the business activity of the firm such as incase of sales and marketing of the products and services.
4)Cost Savings:- On the biggest advantages of outsourcing is Cost Saving. The lower cost of labor and operational work makes it attractive and it push the companies for the outsource development where it reduces the overhead cost of the back-end operations. Incase if the back-end operations are uncontrollable of the company then the outsourcing will also help them to overcome these such difficulties.
5)Cash Flow:- When a software company follows the offshore outsourcing process, the Cash-flow of the company become streamlined. It will helps in increasing the productivity and efficiency of the services by which the business can be more successful and better prepared for market challenges. It also helps in flexibility in staffing and manpower management.
OUTSOURCING VS INSOURCING:-
Outsourcing is a well known concept and has been accepted and implemented by the many organizations across the whole world. It often helps the organization as a cost-saving tactic. It allows a business to focus on its core competencies while loading its non-core functions to outsourcing providers in low cost countries.
Their argument is that outsourcing will lead to the loss of local jobs and may affect the economies of nations that outsource.
Insourcing is a recent concept that has been advocated as an alternative to outsourcing. Companies believe that it will lead to better management control and job creation at the local level. Insourcing is also seen as a solution to the problems of control and hidden costs with outsourcing. Insourcing also seems to be popular among those companies who have been dissatisfied or even unsuccessful with outsourcing. It is also employed when temporary workers fill positions within an organization for a short duration.
In the end I would like to say that outsourcing services are backbone of modern business organizations that will help the companies in reducing the risks related in the terms of technology, economy and latest marketing trends.
