Globalization has transformed the whole IT business scenario and the way of doing business has changed a lot. There are no more limitations that were earlier imposed by geographical borders. This has increased the scope of global IT outsourcing whereby businesses contract out their back office tasks to BPO companies located in India, China, Malaysia, Philippines, Thailand, etc. to enjoy the benefits of outsourcing. It has been an asylum for many businesses and the phenomenon has immensely helped them in many ways. Some of the key advantages and disadvantages of business process outsourcing are explained below.
Advantages & Disadvantages of outsourcing
What is outsourcing?
Outsourcing means “to source out”. In other words, outsourcing refers to the practice of securing products and services from a company that is based in a foreign country. Outsourcing is a common practice in industries that face labor shortage or the dearth of workers who possess specialized skills in specific domains. Outsourcing is also a solution for companies that look for cheap labor and want to increase the return on their investments.
How can outsourcing benefit a company?
Companies primarily choose third party outsourcing companies in order to cut costs and streamline their operations. However, in modern times, offshore outsourcing has evolved to assume a new makeover. Today, businesses seek outsourcing support rather insourcing to get access to talented resources from developing countries at a fraction of the cost that they might need to pay if they hire from their own countries.
By allocating some of its key day-to-day tasks to an outsourcing service provider, a business can reduce its own overhead expenses on deploying in-house infrastructure and in-house staff.
Companies that provide outsourcing services deploy advanced infrastructure, robust data security systems, and highly-qualified employees. So businesses that choose to outsource want to capitalize on the competitive advantages of the outsourcing service providers.
With this option, companies can forego the idea of spending money on hiring and training specialized staff as well. And all these benefits sum up to reduce costs and improve profit margins.