Benefits Of Outsourcing.
By
Giridharan
February 04, 2010
This article focuses some benefits of outsourcing, not just in a context of IT but in general context as well. Simon Domberger, an Economist published a study in 1998 called "The Contracting Organization" in which he published the results of his study of various organizations.As per this Study, the following are the benefits of outsourcing: Specialization:If an company focuses its attention on the activities at which it expert and efficient, the value that it can contribute is maximized and it benefits from the economies of scale as well. This can be found in organizations like Nokia or Nike or iPod which focuses just on product design and outsources all its manufacturing activities elsewhere.Market Discipline:When an organization contracts out the delivery, support or maintenance of its product of service, the focus changes to right place i.e. Customers, Competitors and Markets. So it becomes better at recognizing trends and responds to varying market conditions. With global outsourcing, the company starts to focus on outputs and not inputs and that leads to process innovations and reengineering to deliver maximum customer value. Flexibility:As an organization operates with a network of vendors it will find it easier to add or change vendor organization in response to market demand. This leads to huge financial gains.It is always more difficult throwing an in-house department than stop working with a vendor organization, when the demand for goods and services are no more there. Similarly, in a short-term an organization cannot build up a department immediately for a new product or services. Cost Savings:Definitely, outsourcing delivers substantial cost savings in comparison to delivering the product or service in-house. This is because of two main reasons Expertise in vendors organization: A specialized vendor passed on its benefits of engineering processes and economies to scale to your organization which results in cost savings2) Low Cost labor: An organization can gain from access to low cost labors in other countries such as India. Maximum customer wants a single point to manage all their IT requirements and saying a no means loosing an account forever. In such a scenario outsourcing what you cant do yourself is matter of survival.
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