Concept of Outsourcing

Title: Outsourcing

Objective:
Outsourcing is also used if a certain company or individual has the inability to perform a specific task and get the result they want. These company uses outsourcing to look for an individual or a company who could provide better results than if they were to do the same task. The cost may be slightly higher but the results are better.

Outsourcing therefore has two primary objectives:
1. To get labor at reduced cost but get the same or slightly better results.
2. To get better results for the same or slightly higher cost.

Brief Overview:
In a survey conducted by human-resources.org, outsourcing was one of the twelve best HR practices. A precise definition of outsourcing has yet to be agreed upon. Thus, the term is used inconsistently. However, outsourcing is often viewed as involving the contracting out of a business function - commonly one previously performed in-house - to an external provider. Outsourcing is contracting with another company or person to do a particular function. Almost every organization outsources in some way. Typically, the function being outsourced is considered non-core to the business.
Traditionally, companies were viewed as highly integrated firms which owned and managed all the resources in their domain. Over the years, the scale of operations and the complexity of business grew making companies think of more flexible business models. The concept of outsourcing grew out of this need for better and flexible organizations.

Scope:
The companies have now realized that they cannot be best in everything so the good companies have decided to go for the thing they are best at and outsource everything else i.e., focus on their core competency, and let someone else do the rest in a more efficient and cost-effective manner.
Most of the branded organizations are outsourcing their requirements to outside firms. It is a big business & almost two thirds of the companies studied for HR outsourcing had adapted to the same.
One very important trend in the recent times has been the growth of human resource outsourcing. HR outsourcing is the outsourcing of peripheral but necessary administrative tasks such as payroll, benefits, education/training, recruiting personnel, administration, to realize economies of scale and achieve standardization of services.

Limitation:
There are some limitations to outsourcing as well. One of these is that outsourcing often eliminates direct communication between a company and its clients. This prevents a company from building solid relationships with their customers, and often leads to dissatisfaction on one or both sides. There is also the danger of not being able to control some aspects of the company, as outsourcing may lead to delayed communications and project implementation. Any sensitive information is more vulnerable, and a company may become very dependent upon it’s outsource providers, which could lead to problems