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Why Outsource? The Benefits of Outsourcing

Updated on May 28, 2013

Outsourcing can be simply defined as the process in which a certain company transfers some of its tasks or functions to third party providers. One perfect example of this is an auto manufacturing company that does not manufacture its own sound systems and air conditioning units. In order for the company to secure the said pieces of equipment, they need to “outsource” the task to external suppliers.

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Outsourcing is not a new phenomenon as many people tend to believe. For many years now, a lot of organizations are contracting out some of their work such as building maintenance, bookkeeping and payroll, security, customer service, etc. to outside firms. But it is only in recent years that this highly advantageous process gained the spotlight.

Many companies nowadays are experiencing the various benefits of outsourcing. In fact, many of them have been able to expand their businesses with its help. One such advantage that a company gets when it decides to outsource portions of its tasks is access to a pool of expert and experienced professionals. Hiring and training new employees can be costly and time-consuming. However, when a company decides to outsource, it saves money and time and gains access to highly skilled workers.

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In addition, when a company outsources jobs to outside firms, its fixed costs are changed into variable costs. This reduces the need for the company to spend a large portion of its revenue on unnecessary expenditures thereby freeing capital which can be used for investment purposes. The company can then invest the money it has saved on income-generating activities.

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Another benefit that an enterprise gets from outsourcing is more time and focus to do its core activities. When a company expands, so does its back office. This expansion means that the company needs to use more of its workforce and financial resources to manage its expanding non-core activities. However, when this happens, the company may be forced to sacrifice the quality and amount of time it spends for its core activities. This scenario can jeopardize the standing of the company and may even hinder it from further thriving. Fortunately, with the help outsourcing, companies can avoid this kind of situation.

Furthermore, when a company outsources, it reduces its level of risk. Every venture has various kinds of risks attached to it. For instance, government laws, competitors, the market, and even technology are some of the variables that can put the company at risk. However, firms that provide outsourcing services assume and handle the risks in behalf of the company. Additionally, they have the expertise and experience needed to manage the said variables and reduce, if not totally avoid, the risks involved.

Finally, with the help of outsourcing, a company can start its new projects right away. Outsourcing firms have the people ready to perform specific non-core tasks. If an enterprise decides to train an in-house team to do these tasks, it may take weeks or even months for them to employ the qualified individuals and provide them with the training they need. However, outsourcing providers will give companies immediate access to workers ready to do the tasks assigned to them.

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      tobias 4 years ago

      I think outsourcing can give us more than that.