Outsourcing

Outsourcing is the contracting out of an internal business process to a third party organization. The practice of contracting a business process out to a third party rather than staffing it internally is common in the modern economy. Outsourcing sometime involves transferring employees from one firm to another. The overview is that the Two Organizations may enter into a contractual agreement involving an exchange of services and payments. Outsourcing is Said to help firms to perform well in their core competencies and mitigate shortage of skill or expertise in the area they Want to outsource. Outsourcing can offer great budget flexibility and control, Outsourcing lets organization pay for only the services they need, when they need them. It also reduces the need to hire and train specialized staff, brings in fresh engineering expertise, and reduces capital and operating expenses.

Reason for outsourcing is to avoid certain type of costs, Among the reasons companies elect to outsource include avoidance of burdensome labor laws regulations, high taxes, high energy cost and unreasonable cost that may be associated with defined benefits in labor union contracts and taxes for government mandated benefits.