Outsourcing is defined as subcontracting specific functions to a third-party company or -person. An increasing number of companies have begun specific job outsourcing for some basic reasons. These reasons are:
1) to save money or reduce costs,
2) to focus more on the most pressing and/or immediate issues or functions while having external professionals manage other details that need to be taken care of; and
3) to gain access to distinct enterprises or service providers from which they can obtain technical skills and/or services, which are not promptly available within these companies. There are various forms of outsourcing, but the most common forms however are the business process outsourcing (BPO) and Information technology outsourcing (ITO).
On why job outsourcing is increasingly becoming an alternative approach for most companies nowadays is because of the several benefits that companies obtain from doing so. Such benefits include:
1) cost savings since the company gets the outsourced job done by external experts at a reasonable lower cost;
2) better risk and quality control management since the service providers are responsibility in producing certain quantity and/or quality output, which are usually detailed in an agreed upon outsourcing agreement (Service Level Agreements or SLAs);
3) acquiring access to even highly specialized knowledge and expert pools, which may not be available internally and so the company is further enabled to focus on core competencies and business concerns; and 4) improved management capability since outsourcing provides the company some form of flexibility in managing its production or output.
Outsource service providers may be considered as an additional arm for companies since responsibility for previously done internal functions or tasks are given to them. Unless quality output is consistently provided, a long-term commitment between companies can be possible.