Have you ever been wondering why companies invest in outsourcing?

Posted on 18/08/2017 9:48am

I am sure that you already heard term “outsourcing”. It is more and more popular. Usually people know intuitively what it means, but cannot explain it if somebody asks. Plenty of people, which I have met, don’t also understand why enterprises are so interested in outsourcing.

Author: Maciek Lulko
Source: http://www.flickr.com

I have often been asked the following thing – why do enterprises pay for an external company to do things that they are able to do by themselves? I need to admit that this logic may seem to have sense – if external company is able to earn money on doing tasks for our firm, why can’t our company conduct it by themselves?

I am going to try to explain this on the following example. Assume for a moment that you posess a company that invents and produces new phones. You are wondering about outsourcing managed services- check examples. So, you are looking for a rewarding company that works in the area of mobile app development- learn more here. What will your company gain if you decide to outsource?

To start with, you would reduce costs. Developing new advanced producst will require hiring many professionals that are very expensive as employees. This would be a lot more profitable to posses to outsource an external firm which specialises in this area and already has experienced professionals. As a result of, it is highly likely to be less expensive to outsource an external company, than to hire specialists within the structure of your firm. That is 1 of necessary factor that makes firms use outsourcing. The central aim is cost reduction. Apparently, not the only one.

Nonetheless, firms can lessen labor costs also by outsourcing services from the external enterprise that is placed abroad. Certainly, it has to be country that has very well educated people but cheaper cost labor at the same time. I think India can be the best example of such country that is especially popular in such services.

At the end, outsourcign enables to develop the quality of services. For example, if you decide that mobile app development would be created by outsourced company that specialised merely on this area, this would be definitely more successful than if this were created by our employees who are not specialised in this narrow area of expertise.

Tags: company, area, labor