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Have you ever been thinking why concerns develop outsourcing?

Posted on 18/08/2017 9:11am

I am sure that you already are familiar with term “outsourcing”. This term is more and more popular. Very often people know intuitively what this term means, but can’t explain it futher. Most of people, that I have met, don’t also understand why firms decide to use this.

Author: Maciek Lulko

I have often heard the following thing – why do firms pay for an external firm to do things that they are able to do by themselves? I need to admit that the logic might seem to have sense – if somebody else is able to earn money on doing tasks for our firm, why wouldn’t our company do this by themselves?

I will try to explain this on the following example. Assume for a while that you own a enterprise which invents and produces new mobile phones. You are wondering about outsourcing managed services- see more details. Consequently, you are looking for a favourable enterprise which works in the area of mobile app development- What would you gain if you decide to do this?

Firstly, you can save money. Developing new advanced producst will require employing many professionals which are really expensive as employees. This would be much more profitable to posses to outsource an external firm that is specialised in this field and already owns experienced professionals. Because of that, that is highly likely to be low-priced to outsource an external company, than to keep proffesionals within the structure of our company. That is 1 of relevant factor which makes businesses go for outsourcing. The major aim is cost cut. Obviously, not the only one.

Nonetheless, companies can lower labor costs also by outsourcing services from the external firm which is based in the foreign country. Surely, it has to be country that has very well educated people but cheaper cost labor at the same time. I think India is the best example of a country which is particularly popular in such services.

Eventually, outsourcign enables to increase the quality of services. For example, if you agree that mobile app development will be created by outsourced company which specialised just on this area, this would be probably more successful than if it were created by our employees who are not specialised in this narrow field of expertise.

Tags: company, area, labor