What are the features of outsourcing?

Answer 1

A practice used by different companies to reduce costs by transferring portions of work to outside suppliers rather than completing it internally. Companies that decide to outsource do so for a number of reasons, all of which are based on realizing gains in business profitability and efficiency. Principal merits of outsourcing include the following: Cost savings: Many businesses embrace outsourcing as a way to realize cost savings or better cost control over the outsourced function.

Staffing levels: Another common reason for outsourcing is to achieve headcount reductions or minimize the fluctuations in staffing that may occur due to changes in demand for a product or service.

Focus: Some companies outsource in order to eliminate distractions and force themselves to concentrate on their core competencies.

Morale: This is an often-overlooked but still notable benefit that can sometimes be gained by initiating an outsourcing relationship.

Flexibility: Still others outsource to achieve greater financial flexibility, since the sale of assets that formerly supported an outsourced function can improve a company's cash flow.

Knowledge: Some experts tout outsourcing of computer programming and other information technology functions as a way to gain access to new technology and outside expertise.

Accountability: Outsourcing is predicated on the understanding-shared by business and vendor alike-that such arrangements require quality service in exchange for payment.