Outsourcing - The Latest Trend in the Global Market
IT outsourcing refers to the transfer of the entire process, such as product design or manufacturing, to a third party in order to be free from additional responsibilities and concentrate on the core aspect of the business. The client and the supplier enter into an agreement for a stipulated period of time and the supplier gets resources in the form of people or assets. At the end of the contract term, the client decides whether to renew the contract or terminate it and move on to another supplier.
Other than IT outsourcing, the business that are outsourced are real estate management, accounting, telemarketing, web development and other customer support functions.
There is significant difference between outsourcing and off shoring. The latter means transferring a part of the organization’s function to another country. With increase in globalization of IT outsourcing companies, the local global market is affected. Due to the advantages of outsourcing, these companies are signing contracts with other countries, thus leading to job disruption and unemployment to their own nation.
The merits of outsourcing include acquiring human resources at cheaper rate; recruitment, staff management, purchase of latest technology which involves investing huge amount can be avoided and the time to develop a product is minimized.