A trend that
has increasingly gained a lot attention and became popular is outsourcing. The
plan of outsourcing originated from the theory of core competence by the C.K.
Prahlad. According to this ideology, the business must identify its core functions
and competence and should be focusing on them only. This will give them the
success rate that they need. As for the non-core activities, it should be
handled by some other outside agencies or organisations.
In other
words, outsourcing is the contracting out of the non-core activities and work
to other agencies who are specialized in those areas. The aim is to benefit
from their expertise and also put all of their focus on their main activity.
Let us take
an example. The company ABC Ltd., whose main activity is to deal in electronic
products, wants to advertise some other brand of cosmetics launched by them.
For this, they will have to divide their focus between working with the
electronic products and advertising the new one. Instead of doing that, they
can hire an agency who is specialized in advertising, let’s say XYZ advertising
LTD., and they will do that work for them. This helped ABC to advertise their
new brand without compromising with management of the older one.
Here is a
list of benefits of the outsourcing process.
1.FOCUS ON
CORE FUNTIONS
As discussed
above, it becomes easier to focus on your own core functions and activities if
the side activities are given to someone else to complete. By this, better
utilization of human as well as physical resources is done.
2.SPECIALIZATION
It is
possible that if you do these non-core activities on your own them you might
not ace it considering it is not your forte. Contracting it out to someone who
is specialized in that gives you the benefit of their expertise. It guarantees
you that those professionals will do a brilliant job at it since it is their
specialty.
3.REDUCES
COST
Since, the
outsource agency are a master of what they have been told to do, they will
charge less for their services considering they are providing the same services
to a number of other companies. This will save up the cost of your company
since if you do it on your own then you might end up using a lot of extra money
as you are not aware of that particular area yet.
4.GROWTH
Outsourcing
is a collaborative learning process. Both the companies involved gets to know
more about each others field. Because of this, companies these days are not
only outsourcing their non-core or even core activities but also seeking the
benefit of knowledge from other agencies like Research and Development.
5.ECONOMIC
DEVELOPMENT
Outsourcing
not only helps the companies with its activities but also creates more
employment opportunities and entrepreneurship. Because of this, a lot of IT
sector has shown a tremendous growth in its employment and entrepreneurship.
Not just this, but it also increases the exports in the host countries,
countries from where the outsourcing is done.
