According to India-report.com ….
“Outsourcing” is the latest buzzword
in global economy today, but it also makes for good business sense for a lot of
businesses. A lot is being written on the subject but the benefits of
outsourcing far outweigh the reasons why companies should not opt for it. The
top 10 reasons for outsourcing are:
1. Savings in Labor Cost - This is perhaps the most
important reason why companies should opt for outsourcing some of their
activities. The cost of labor in some of the developed countries is extremely
high and creates a huge expense for the employers. If the same jobs were to be
done at a far lower price by equally skilled personnel then it is definitely
advantageous.
2. Growing Global and Local Market Shares - More
importantly, even if they do not outsource, their rivals will. This will affect
them adversely as their rivals will gain in terms of profitability and lower
costs. Able to pass on high quality at lower prices, rivals will walk away with
market shares, which a firm cannot afford to lose. Stagnating corporate profits
will limit the creation of new capital and its reinvestment within the domestic
economy.
3. Communications - With the improvement in
telecommunication networks and lowering of telecom costs across the world,
outsourcing as an option provides round the clock services to companies and
their clients without putting too much of a strain on the existing manpower.
4. Speed - As a result of better communications,
outsourcing has helped a number of companies reduce their turnaround times by
taking advantage of the time difference between countries. In the big picture,
firms reduce time to market on new products and improvements beating rivals
that do not outsource.
5. Tax Breaks - A number of companies in the US have
benefited through tax breaks from outsourcing. According to Federal Law,
companies can defer payment of tax on profits earned abroad for an indefinite
period. These taxes are to be paid only when they return these profits to the
US.
6. Move to Higher Segments of the Value Added Chain - The
move to outsource helps the higher income earning countries to move to higher
segments of the value added chain as they are now free of some tasks that have
been outsourced.
7. Profitable Use of In-house Resources - Firms around the
world are attempting to make the most of their in-house talent pool. Expertise
and experience are definitely in short supply,much in demand and more
importantly, expensive. Outsourcing helps resolve this dilemma and frees a
large pool of in house resources for other work.
8. Focus to Accelerate Business Transformation - This is
done by passing on various specialized jobs to the outsourced vendor and
focusing on the core business. This results in more time spent working on
strategic issues for business transformation and implementation of the same.
9. Access to Skill Sets and World-wide Capabilities - The
growing shortage of skilled workers in the US has prompted companies to look
elsewhere for these skill sets. Outsourcing enables firms to access a worldwide
pool of workers equipped with a range of skills.
10. Reductions of Risks - Organizations make large
investments in their operations and have to deal with a number of economic and
political changes, which may prove risky for their businesses. By outsourcing,
companies are able to reduce some of the associated risks because service
providers also share in some of the costs. This reduces the cost burden on the
outsourcing company.
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Ref: http://www.india-reports.com/articles/top-reasons-outsourcing.aspx
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