Outsourcing

Abstract

The report tries to address the issue whether Outsourcing is beneficial or disadvantageous and involves a critical analysis of the various benefits of outsourcing against the disadvantages associated with it. It presents a conclusion in the end, highlighting the benefits it provides and clearing the misconceptions that are linked to this debatable issue.

Outsourcing: The Meaning

According to C. W. Axelrod, Outsourcing is, in broad terms, the provision of certain goods or services by third party specialists in direct or indirect exchange for money (Axelrod 2004, pg 1). In other words, it means hiring specialist organizations or groups which may be located overseas to carry out some of the core or non core activities of the business in return of money. The outsourcing industry started in the 1980’s in India when few airlines began their back-office operations in India; and since then, there’s been no looking back whatsoever. Today this industry is synonymous with ‘sunshine industry’ or ‘youth oriented industry’. It has gained so much importance in such a short span of time that the government is planning a separate ministry for it.

Outsourcing: The Need of today

With the government planning a separate ministry for this industry, this in itself speaks volume about the vitality of this sector. This industry has truly proved to be a beacon of hope for professionals who are unable to find a full time job and at the same time it has also helped the youngsters’ fresh out of college gain experience and business skills before embarking on a full- fledged career. Clearly, one of the main reasons driving outsourcing is the possibility of significant cost savings, specifically on labor which traditionally represent 60-100 percent of total cost of products and services, by as much as 75 percent (Goldsmith 2003). The other reason why outsourcing has become the need of the companies is that it helps the organizations in increasing their productivity and quality,...