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What Drives Outsourcing?

Most of us see outsourcing as a method of reducing costs. Availability of low cost skilled professionals and infrastructure makes outsourcing feasible. However, there are other things that have to be accounted for during outsourcing. These include vendor selection cost, transition costs, legal costs, etc, which people often fail to consider. This is the reason why companies, in spite of outsourcing offering such an inexpensive alternative, fail to attain positive return on investment.

A deep investigation needs to be done before going forward with such a strategic decision as offshore outsourcing. However, the most common causes behind offshore outsourcing can be classified.

Outsourcing all its secondary as well as support processes allows a company to stay focused on its core competency.

Often it happens that a specific project undertaken by a company requires technical expertise that is not available within the company. This means that the company has to hire employees, which may not be feasible in case the project is of shorter duration. Outsourcing is the only sensible decision in such a situation.

An organization engaging itself into a short-term project has to employ personnel only for a short term. Moreover, risks are always associated with new employments pertaining to their capability adaptability etc. Outsourcing is the best thing which it can do in such a situation. By outsourcing not only can the organization relieve itself of the burden of hiring and firing, but can save costs considerably.

The emerging competitive market scenario forces companies to work on a very high risk level. Undertaking a project has risks associated with it especially when the high overhead and infrastructural costs are concerned. By outsourcing the project to an offshore vendor such risks may be minimized. Organizations offering offshore services already have the skill and expertise, and they work for a number of clients at the same point of time to reduce risks associated with a particular project.

While the above mentioned reasons are solid enough to support offshore outsourcing, these alone cannot guarantee the success of offshore outsourcing. What is more important is a strategic planning of the objectives of outsourcing. If the objectives are not strong it is not unnatural that offshore outsourcing will turn out to be a blunder while a set of clearly defined objectives ensure offshore outsourcing a highly profitable undertaking.


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