| Outsourcing is referred to as the transfer of a | | | | neighbors. And as the world gets wired into an |
| business function or any process of a business | | | | information highway, this transportability of jobs is |
| function along with the associated operational activities | | | | definitely going to increase manifold. Add to this the |
| and responsibilities to an external service provider by | | | | advantage arising out due to difference in time zone |
| the virtue of a contractual agreement that defines the | | | | between the client and vendor nation, which provides a |
| scope of services. Under the agreement the supplier | | | | scope to do a sequential task during normal day shift in |
| acquires the means of production of the client while | | | | different time zones -to make it seamlessly available |
| the client gets the services of the supplier. Outsourcing | | | | 24x7 and it becomes easy to understand that |
| involves the acceptance of better organizational | | | | outsourcing is not only about file transferring but also |
| synergies: cost reduction, productivity growth and | | | | myriad other reasons like |
| innovative capabilities, to name a few. | | | | > Spectacular cost savings by accessing lower |
| A trend that started with manufacturing companies like | | | | cost economies through outsourcing generated by the |
| Coca-Cola, who outsource supply chains in order to | | | | wage gap between industrialized and developing |
| buy more time to concentrate on its marketing | | | | nations. |
| strategies ,BPO's are increasingly venturing into newer | | | | > Services provided by BPO vendors are generally |
| and newer territories with each passing day. Based on | | | | on a fee-for-service basis. This helps a company |
| the works that are being outsourced today, BPO's | | | | becoming more flexible by transforming fixed into |
| providing services can be broadly categorized into the | | | | variable costs. |
| one that perform back office functions like offering | | | | > Outsourcing provides a firm with increased |
| accounting services, etc and the companies that | | | | flexibility in its resource management and reduces the |
| provide front office services like marketing and tech | | | | response time to major cyclical fluctuations. |
| support. | | | | > An outsourcing client gets enough time to focus |
| Over the past few decades not only has the nature | | | | on its core competencies without being burdened by |
| of outsourcing undergone tremendous change as the | | | | the demands of bureaucratic dictate as in the case of |
| periphery of outsourcing has transformed from | | | | Coca Cola who got more time to strategize their |
| catering, cleaning etc to more critical activities as | | | | marketing policies. |
| accounting but also from outsourcing within the | | | | > Outsourcing critical functions like accounting gives |
| domains of ones territorial boundary to destinations | | | | organization the flexibility to increase the speed of |
| beyond the limit of ones national boundary. Today | | | | business processes. |
| companies are willing to form outsourcing alliances for | | | | > An improved method of capacity management of |
| even critical functions like accounting with offshore | | | | services and technology where the risk in providing the |
| service providers. This way, they leverage on the | | | | excess capacity is borne by the supplier. |
| specialized skills and expertise of vast number of | | | | Advantages to outsourcing are many and |
| professionals in low cost destinations as India. | | | | organizations today are quick to realize the importance |
| The singular factor that has made possible all these | | | | that outsourcing of critical non core functions like |
| outsourcing activities in today's globalized arena is the | | | | accounting to low cost destinations like India gives |
| explosion in the number of users of the internet which | | | | them. It is not only about cost benefit but also a definite |
| has diminished national boundaries and in the process | | | | competitive edge in today's troubled business |
| has let people across the world interact as next door | | | | environment. |