- ECONOMIES OF SCALE.
Outsourcing organization carries out activities on full time basis and at possibly at much larger scale than their clients. They may have economies of scales and have specialist able to bargain discounts better than their client. Some extent of these benefits may be passed to their clients to gain business. - PLANING AND BUDGETING.
Cost can be known in advance reduces uncertainties in planning and budgeting. Future cash flow requirements can be better anticipated. - REALISATION OF FIXED ASSETS
Outsourcing can make some asset idle which can be used deployed elsewhere or can be sold to realize cash flow which contribute towards the improvement of liquidity position. - ELIMINATION OR REDUCTION OF BOTTLENECKS
Outsourcing organization may have larger capacity which can be in line with other activities of the clients. - REDUCED OVERHEAD COSTS.
Outsourcing organization may be ready to provide services on hourly or per unit basis. - EXPERTISE AND EXPERIENCE.
It is possible that outsourcing organization has specialist knowledge; skills and equipment enable him to provide better quality services. - FOCUS ON CORE ACTIVITIES
It will reduce managerial workload allowing them to focus on core competencies and delegate areas on which they lack competencies and resources to competent organization.
Disadvantage Of Outsourcing
Great post!
ReplyDeleteThe reason why I am into any kind of outsourcing is because of these benefits. When it is done right, you could save time, money, energy, etc.
You also have a huge number of applicants coming from all over the world. This could be an advantage as well as a disadvantage. Because of a wide variety of option, it'll be hard to pick one of them. To be able to make sure you wouldn't regret choosing the 2nd best, make a hiring strategy that you find effective. You have to choose not only because he's skilled, but also because he's driven.