The what, why and where of outsourcing

Introduced in the 1980s, outsourcing is the process of delegating non core internal tasks to an external business entity which specializes in the management and execution of such tasks. It deals with utilizing external expertise for executing specific tasks which are more or less short term and do not hamper the core competency of the organization. The most popular business model, it is now believed that everything that can be outsourced will be. From manufacturing, engineering, architecture to designing.




The ways in which a company can extract business value out of outsourcing have been divided into the following three classes -

• Use Outsourcing to help solve the immediate business problems.
• se Outsourcing to improve the business.
• Use Outsourcing to transform the business.

Certain factors help any organization in deciding upon a particular outsourcing services provider. These factors are criticality, stability and simplicity.

• The criticality captures importance of an activity to business positioning and importance of an activity to business process. It includes the strategic importance of an activity and its importance to the business processes as a whole.
• The simplicity or complexity is with regard to the capabilities of the firm. Whether the project can be effectively handled by the existing capabilities of the firm is measured by simplicity or complexity which is a relative term.

Consultancy A.T. Kearney identified the most desirable outsourcing destinations in a study in 2007. Countries were ranked by.

1. Financial attractiveness, based on such measures as compensation and infrastructure costs;
2. A nation's people skills, availability of language and educational skills, and the size and quality of the IT industry; and
3. Their economic/political environment, infrastructure quality, cultural exposure, and IP security.