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Essay on Economic Benefits of Outsourcing

human resource outsourcingThe idea of contracting some business processes of a company to a third party isn’t a new one, but the technology allowing to make this practice viable and widespread wasn’t around until quite recently. About a decade or two ago outsourcing was one of the most important and widely used buzzword in business – and albeit today it isn’t as hot a topic as then, it still remains an incredibly important factor in global economy.

Although the changing economic situation has recently forced a number of businesses to drift back to perform most tasks within the parent company, there are still a number of notable benefits to outsourcing no one can deny.

1. Cost Effectiveness

The most self-evident reason to outsource is to save money. And the most self-evident way to do so is to contract some activity out to a country with lower average wages than where you live. The latter was especially popular for the last several decades, to the point that some nations such as India have become favorite outsourcing destinations for the entire Western world. Lower wages doesn’t necessarily mean lower quality – there are thousands of well-educated specialists in Asia and South America who would be eager to work for half as much as such a job would cost in the USA.

2. Time Zone Benefits

If you live in America it may be a good idea to outsource some activities to the Old World, and vice versa. The reason? Difference in time zones means that your outsourcers will toil while you sleep without asking extra for working odd hours and you will be presented with the results of their work first thing in the morning. It is a viable idea for hiring customer support this way as well, at least if you don’t mind their not always very good English.

3. Infrastructure and Technology Savings

One may contract some activity out to another company or business that specializes in rendering particular services and is well-equipped for this, thus freeing oneself from the necessity of purchasing specialized equipment.

4. Personnel Recruiting and Training Savings

Outsourcing allows you to maximize the benefits of one of the core principles of economy – specialization. It gives you an opportunity to avoid hiring experts or training your current employees to perform activities that are secondary to your business by hiring another company that is already well-equipped for dealing with this assignment.

5. Concentration on Core Activities

Outsourcing allows you not only to avoid extra costs, but to keep your business smaller and more manageable without sacrificing its overall output. You keep only those employees that perform functions that belong to the core activities of your company without having to support many additional departments.

Of course, outsourcing is not a magical cure-all for all economic problems of a business. Nor is it without drawbacks – but still, there are many situations in which cleverly organized outsourcing may mean the difference between a business that is manageable, profitable and developing and a business that is overcomplicated, middling and stagnant.

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