What is Outsourcing
A common assignment on What is Outsourcing is as follows:
Outsourcing appears to be one of the terms whose meaning varies only slightly, if at all, in common business usage. The almost universally accepted definition is: the use of outside resources to perform activities traditionally handled by internal staff and resources.
A 1998 survey of current and potential outsourcing end-users found that the top five reasons companies used outsourcing were (in rank order) to:
a) reduce and control operating costs;
b) improve company focus;
c) gain access to world-class capabilities;
d) free internal resources for other purposes; and,
e) secure resources not available internally. The next five reasons were (in rank order) to:
f) accelerate reengineering benefits;
g) gain control of a difficult or out of control function;
h) make capital funds available;
i) share risks; and,
j) secure an infusion of cash. All of these reasons collectively have given significant impetus to the proliferation of outsourcing strategies, approaches and styles.
As early as 1991, a study of 1,005 companies by the international consulting firm Wyatt Company reported that 35% of American-owned firms surveyed had increased their use of outside vendors since 1986. By 1994, firms in the U.S. were outsourcing about $16 billion in goods and services according to the Outsourcing Institute, headquartered in New York, and by mid-decade outsourcing had gained even more ground. A study by Arthur Andersen that year found that 85% of business organizations were outsourcing work they had previously performed in-house.