Step 9 B:- Profitable Outsourcing to cut cost and increase efficiency

Profitable Outsourcing

We are living in the Era of specialization and cutthroat competition, to survive we need to focus on our main business while the other subsidiary functions should be outsourced to reduce the cost and increase the efficiency. Learn the secrets of Profitable Outsourcing, to increase profit and efficiency.  


Rather than a question of why outsourcing, today, the more apt question would be why not outsource. As the definition of outsourcing goes, it is the process of transferring of the companies work to outside agents, in place of internal agents. The main motive behind outsourcing is cost reduction.

Innovations have always been accepted due to its cost-efficient, streamlined business strategies and its efficiency. In the case of outsourcing too, technological innovation has been helpful in all aspects. The increase in the number of outsourcing companies into developing countries is proof of this.

Present scenario

Outsourcing has in itself set up a trend in the global market, claiming almost $952billion Dollars in recent years. Well. This constant increase in the share of the world market by outsourcing has even led small companies also to venture into adopting this strategy. Getting things done for a low payment is preferred by any rationale firm or industry when their own host employees demand higher wages. The benefits seem to outweigh the costs.

In the 1990s, when outsourcing slowly started to be recognized as an efficient and cost-saving business strategy means, it was restricted only to

The marginal costs and marginal revenue are two concepts which play an important role here. This is so because of the external costs that get incurred due to outsourcing. There are no internal costs involved.

Bidding, a useful tool for outsourcing, helps the companies to hire cheap but talented labor. The globally available talented labor pool is the main way to reduce wages. Companies use such labor because low wages to these laborers is an incentive to them. Such is the way that outsourcing helps in cutting costs. The laborers from these outsourced countries prefer to take up these jobs, even though their wages stand nowhere near the international standards because to them this is an incentive compared to the wages in their own country. Also, the ever-increasing population in these developing countries forces them into taking up outsourced jobs. Thus, it is a win-win situation for both the employee and the employer.

The effect of technological revolution: a story of efficiency no borders and less time.

The innovations in the technological front help these companies to reach across boundaries within a wink of an eye. Outsourcing is seen as a feasible way to streamline business operations. Besides reducing the operational costs, it also reduces the heavy load of paperwork. Outsourcing has been able to improve the productivity of the company by putting the resources of labor power to better use. Moreover, outsourcing helps the firm or the industry to work round the clock. Such a strategy takes lesser time and effort to supervise the workers.

The myths and restrictions on the process of outsourcing are fast disappearings. It is also gaining its place as a good business strategy rather than as a mode of domination by the corporate giants.