Outsourcing is a process whereby a company or corporation will hire another company to perform functions that would cost them so much to handle themselves. The decision to outsource is often made in the interest of lowering cost, redirecting, or conserving energy directed at competencies of a business, or to make more efficient use of labor, capital, technology and resources.
Benefits Of Outsourcing
1. It Reduces Cost
Many businesses embrace outsourcing as a way to realize cost savings or better cost control over the outsourced function. Most companies outsource to vendors who specialize in a given function and performs that function more efficiently than the company could.
2. It Reduces Risk
Every business investment carries a certain amount of risks. Markets, competition, government regulation, financial conditions, and technologies all change quickly. Outsourcing providers assume and manage much of these risks for you, with specific industry knowledge, especially security and compliance's issues.
3. It Promotes Faster and Better Services
It makes your services offering better with high quality deliverable and decrease the lead time it takes for your products to reach the market place. Thus you would be faster in getting your ideas converted into products and better at delivering the value added proposition.
4. It Promotes Efficiency
This leads to an increase in productivity and efficiency in the process, thereby contributing to the line of your company.
5. It Reduces Labor Cost
This helps to minimize the workload of staff in a company and helps employees from tedious task.
6. Flexibility
It helps to gain financial flexibility, since the sale of assets that formerly supported an outsourced function can improve a companies cash flow. A possible pitfall in this reasoning is that, many vendors demand long term contracts, which may reduce flexibility.
7. It promote skilled resources.
The resources employed by the outsourcing company are well educated in the respective business areas and are experienced in handling the business needs of companies they are outsourcing for.
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