Tuesday, April 27, 2010

Balancing Outsourcing: Boon or Bane?

Talking about outsourcing will right away bring up cheap labor in our minds. The fact is that outsourcing is more than it meets the eye; it is not all about having your job done cheaply. Outsourcing is about having your work done from a professional outsourcing company, a skilled professional team, or an individual expert outside your organizational structure, yet holding all the rights and responsibilities to the production and distribution of the product. This can be both – either advantageous or disadvantageous, at the end of it all that matters is the personal perspective.

So when did it all begin? Well, giving an exact date is impossible but yes, it may have started when people saw the benefits of trading jobs during the ancient civilizations. People started to form groups of likeminded peers and divide tasks that were respective to the experts in the group. Inability to perform a job due to competent reasons forced the group to collaborate with other groups. This wild fire spread across societies, civilizations, and even countries. Seeing this everybody began to choose specializations and there were born the specialists. Traditionally, companies thought of doing all their work single-handedly in-house. But the work grew and thus the production costs as well. During the Industrial Revolution the industrialists sought to gain profits and their goals were well defined –profits only! To cut on the production costs organizations went to others to get their work done cheaply. And so, it all started. Talking about software outsourcing, it didn’t popularize until the 90s. 90s saw the Internet boom and so everybody dipped their hands in the flowing IT river that seemed the most beneficial at that time. Today it is highly impossible to find a task that is not being outsourced. Growing economies like India, China, Brazil, and Russia are the hot destinations to find outsourcing vendors as skilled labor is easily available and the economies help in checking the business processing bills. The overlooked feature that outsourcing provides is that companies can concentrate on their core business competencies and have their sidetrack jobs done inexpensively at the same time.

Now let us talk about the reasons why any enterprise should outsource. As mentioned above, outsourcing gets your work done efficiently yet inexpensively.

Other reasons to outsource work are:
  • Look for corporate growth
  • Spend more time with the customers to improve market share
  • Bring in innovation
  • Lack of technical advancements in the house
  • Access to expert competency and talent
  • Reduce the time to market the product
  • Reap from a pool with variety in knowledge and skills
  • Tax benefits – this will stay respective to the country that work is being outsourced to
The list is endless, and as said before, it’s the perspective that matters the most. So is outsourcing a boon or a bane? Good question. For the short term the country whose companies are outsourcing may see it as a shortcoming. But in the long run, the economy will be booming again. Thus to conclude, even if the outsourcing industry may seem to be a disgrace to the market, in the long term it is going to be the significant market share contributor. The seeds have been sown and the flowers are blooming, the fruits are not far to be reaped.