Outsourcing - A business strategy that plays a catalytic role in attaining the objectives of optimum utilization of resources and focusing on core capabilities, with an eye on cost savings and another on future challenges.

Around two decades ago, this term was quite unfamiliar to our intellect. But now, the changing times have brought with it a totally different set of dynamics. A business is expected to grow, develop, sustain itself, and reach the zenith of success, while constantly interacting with its internal and external environment, and creating its competitive advantage in the process. This is where outsourcing of the secondary business functions comes into play. For instance, the ITES based companies often outsource HR and Data Entry processes to specialized firms, who employ professionals capable of dealing with these issues in a more effective manner.

Focusing on core competencies and outsourcing the support functions is in perfect alignment with the well accepted business maxim of doing the right things as against doing things right.  Hence, when a company uses outsourcing as a growth strategy, it is being effective in its operations. What this means is that apart from being efficient in its utilization of resources, the business entity is also ensuring that the efficiency necessarily leads to effectiveness or desired results.

A relatively novel concept is that of multisourcing where entrepreneurs outsource to more than one firm in order to save the fixed costs of starting a new venture. But more often than not, only the non-core business functions are contracted out to outsourcing providers. 

With proper implementation, outsourcing can truly lead to a beneficial situation for all the entities involved. The outsourcing firm can channelize its resources for innovation, while the service provider creates employment for the qualified professionals. To be able to reap the benefits from outsourcing, strategic evaluation and selection of the specific function to be outsourced is extremely important. What follows this is the formalization of the process with legal and operational terms and conditions.

To conclude, a flexible approach, correct decision making and complete organizational support is what an outsourcing plan needs to be supported with, in order to play a multi dimensional role in augmenting the competitive position of a firm in the today’s marketplace.