Assignment on Importance of Outsourcing

In this globalization era, technology plays an important role in connecting businesses to far areas in the world. Outsourcing has transformed business infrastructure internationally. Previously outsourcing was only used for minimizing the operational costs.

Though, because of the fiercely competitive nature of the current market, companies have started to strengthen their position in the market by outsourcing and expanding their business internationally. the companies that are successfully practicing outsourcing have managed to decrease the overhead costs and are seeking advantages by saving the operational costs as compared to those companies who chose not to implement outsourcing in their businesses. The business unit which will be outsourced completely depends on the market situation and which departments are the strengths of the company. Both core and non-core business functions are outsourced.

The core functions of the company are known as those functions which are based on developing strategies to maximize profits and enhance the performance of the company. Whereas, non-core business functions are those functions that are used in managing daily activities of the company these not used from maximizing the profit. Outsourcing core business functions are not considered a wise idea as it may give the competitors an idea of the strategies and business process of the organization that can be harmful in the future.

Though, outsourcing non-core business functions are considered a good business move. This is because some organizations often find it difficult to manage their logistic functions and suffer from the loss. Several researchers and experts believe that outsourcing business to a third party may help in tackling the business in more enhanced manner and companies can focus on developing its core competencies. Outsourcing a business unit to third parties has emerged very advantageous in the case of profit and the company’s performance.

This increase in business has contributed to a significant extent to the economy of the nation. As technology is progressing, outsourcing a business internationally has become much easier. Outsourcing is a cost-effective method and provides instant results by saving fixed costs