'Outsourcing' is an agreement of sources, which is taken from a third party. For instance, if an enterprise engages in a contract with a telecommunication company for telemarketing, they are said to be outsourcing. The main purpose of outsourcing is to improve the company's functions as the specialized and more cost-efficient department takes hold of their functions. It can be said that outsourcing means transferring certain responsibilities and functions to another person, firm or company and paying them for their services.
It should be remembered that outsourcing only means transferring a significant amount of management to the supplier. It does not include services like buying from another company or partnership. Outsourcing always involves a two-sided trust and contract, and it should be a mutual agreement.
History:
This concept of outsourcing started with Ross Perot when he first introduced data electronic system in 1962. He told the client that they are familiar with running the business while his firm knows how to deal with it.
The international concept:
As in the past decades, there has been a great boom in globalization. Many companies have now started businesses with the idea of outsourcing. There is another related term and that is offshore outsourcing, which means outsourcing internationally. For instance, a company in the U.S. hires a company in India to perform telemarketing for them. Here, the client is really free to choose whom to select for outsourcing. Basically, the enterprises search for countries where labor is cheaper such as countries in Asia, Africa and China. This is the reason why in the past decades, with the boom in globalization, there has been a lot of production from international enterprises like Microsoft, IBM, etc. in Asian countries. Small businesses also take advantage of these by free lancing their jobs on internet.
This kind of outsourced services became more popular after the dotcom crash. Now, one can even provide services to an organization by sitting at home; the contact is the website tat could be used for writing articles, etc.
America is one of the countries availing outsourcing the most, as English speaking people are easily found in India and Pakistan.
Speaking about outsourcing practices has shown mixed results. Some companies, which can afford to hire the best available service from either local or foreign companies, take it as a good point. However, small companies, which are local and cannot hire are depressed because of this system. For them, this is a hurdle in their way of success. Nevertheless, it has created a new way of approaching success and doing joint business.
