Future of Outsourcing

Future of Outsourcing

Outsourcing refers to the delegation of non-core operations from internal production to an external entity specializing in the management of that organization. Businesses made decision to use outsourcing as a means to lower firm costs, redirecting or conserving energy directed at the competencies of a particular business, or to make more efficient use of worldwide labor, capital, technology and resources. Outsourcing entails transferring or sharing management control, decision making of a business function to an outside supplier, as well as, a two way information exchange, coordination and trust between the outsourcer and its client building on strong business relationships and partnerships. Some of the segments frequently outsourced involve: technology, human resources, facilities and real estate management, and accounting. (Wikipedia. 2007).

Thus, from the beginnings, the outsourcing transformed the industry of the world by becoming an accepted management tool redefining and re-energizing the corporations. Outsourcing motivates businesses to rethink the traditional, vertically integrated firms in favor of a more flexible organization structured around core competencies and long-term outside relationship (Outsourcin2india. 2007). For example, “HSBC decided to outsource mainly because the need to constantly improve technology was becoming difficult for the bank, drawing attention away from its core financial services increasingly dependent on fast, efficient technology HSBC needed to move to a new technology platform and became more efficient. The decision to outsource wasn’t only about cost. The bank also wanted to be able to put more people on a job” (HSBC Lesson in Outsourcing. 2006).

Outsourcing continues to play a major part of today’s competitive global marketplace. It is available to many organizations on a national and international level. Furthermore, outsourcing provides many corporations with the ability to harvest the benefits of lower labor costs in developing countries and to exploit the value of artificially manipulated foreign currencies (wikipedia.2007). Major benefit of outsourcing today and for the future is the ability of the organization to develop competitive strategies that