September 21, 2016 11:29 am | Updated 5 years ago.
Outsourcing is the process of delegating a business process to a third-party or external agency. This allows companies to leverage benefits such as lower cost of labor, improved quality, and greater innovation. Outsourcing is not a new concept; companies have been doing it almost as long as companies have been around! They have been hiring “consultants”, “advertising agencies”, “marketing specialists” and “product development teams” for years as well as “security guards”, “cleaning crews” and “landscaping teams”.
Some reasons to outsource:
1. Lower operational and labor costs are among the primary reasons why companies decide to outsource. When properly executed it can have a significant impact on a company’s revenue.
2. Companies may choose to outsource so that they can focus on their core business processes while delegating time-consuming processes to external agencies.
3. Outsourcing enables companies to leverage a global knowledge base, having access to world-class capabilities.
4. Outsourcing frees up internal resources that could be put to use for other purposes.
5. Businesses outsource to gain access to resources not available internally.
6. Outsourcing can save costs and provide buffer capital that benefits the company.
7. Many companies choose to outsource and delegate functions that are difficult to manage and control while still realizing their benefits.
8. Outsourcing helps companies mitigate risk.
9. Outsourcing enables companies to realize the benefits of re-engineering.
10. Some companies choose to outsource to help them expand and gain access to new market areas, by taking the point of production or service delivery closer to their end users
To summarize, companies undertake outsourcing for a variety of reasons depending upon their purpose and vision. While this may vary from company to company, the benefits are visible among some of the leading enterprises around the world where outsourcing has become a core component of day to day business strategies.
The recent tendencies in Offshore Outsourcing are:
1. Small deal size: Customers are no longer willing to pay for hundreds of engineers to develop or maintain applications. The deal sizes today are smaller as there are many reusable components available on the cloud that can easily be integrated to put together a solution that is all inclusive.
2. High-Speed application deployment: Customers are no longer willing to wait for solutions that used to be the norm to develop and deploy applications using legacy technology. Today complex applications are being put together in a matter of seconds and rolled out in months or even weeks.
3. Agility is the key word: Most applications today are being developed using Agile or some similar methodology that enables functionality to be delivered to the customer in the present environment on an incremental basis.
4. Personalized application is the norm of the day: This is the age of integrating best of breed solutions to develop comprehensive applications rather than developing applications ground up.
5. Quality is important: Last but not the least, getting it “first time right”. The most important factor is the quality which has to be kept in mind. Application downtime, for whatever reason, is no longer an acceptable phenomenon.