Outsourcing is the business practice of hiring a party outside a company to perform services and create goods that traditionally were performed in-house by the company's own employees and staff. Usually done as a cost-cutting measure
In addition to saving on overhead and labor costs, the reasons companies employ outsourcing include improved efficiency, greater productivity and the opportunity to focus on core products and functions of the business. Furthermore, more companies are looking to outsourcing providers as innovation centers. According to Deloitte's 2016 outsourcing survey, 35% of respondents said they are focused on measuring innovation value in their outsourcing partnerships.
Particulary a strong reason to outsource involves a shortage of a critical resource. This could be availability of skilled employees , labour force or shortage of materials etc.
Realignment with Core Business
It gives the managers the ability to concentrate on the core business issues instead of devoting resources to areas that may be necessary but are not related to the business' core competencies
Saving on overhead and labor costs, and enable opportunity to focus on core products and functions of the business
Seasonal or cyclical demands put varying demands on the resources of the company. An outsourcing contract could provide the flexibility needed to stabilize these varying demands.
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