Outsourcing

OUTSOURCED

Outsourcing can be defined as the term used when a company takes a part of its business and gives that part to another organization or company (Infolific, 2012). Recently, the terms are most commonly used for technology related circumstances such as handling over the IT help-desk to a third-party and also the telephone-based customer service department. The main purpose for a company outsourcing is to gain immediate economic gain and it is usually coming from saving costs, which allow company to be more competitive. Higher management realizes that by allowing these operations managed by other party will reduce costs and expenses in order to remain efficient. Outsourcing also can be seen as the effect of globalization. In the increasing globalization and global economy, it has been known that transferring non-core activities such as IT and customer service to a country especially India and China would potentially deliver quality services at a lower cost. Therefore it is wise for the companies to transfer their high-cost professional jobs to low cost country in order to attain and maintain global competitiveness.

In fact, outsourcing has been occurring for decades however it is usually involving the manufacturing sector in the past. This is because of cheap manual labor that was available overseas in order for a company to gain more profit by outsourcing the tasks to foreign markets. For instance, the making of America’s covered wagon covers and clipper ships’ sails was a job outsourced to workers in Scotland, with raw material imported from India. During 1980s, most common tasks such as accounting services, payroll, billing, and word processing were outsourced and by late 1980s, outsourcing started to emerge in the business world. Consequently, outsourcing is an integral part of world economy due to globalization, explosive growth of Internet, and the development of information society in the world.

However, overtime outsourcing has shifted involving...