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Outsourcing: Why Is It Needed?

  • Getting expertise
    One major reason to go for outsourcing is to get some resources which the company does not have in its internal environment. This need may arise due to many reasons like a new venture that the company may have entered into, or due to any unforeseen circumstances like a sudden push of the demand of the company’s product.

    So expertise from other sources plays an important role for the company in getting what they need. But as outsiders are involved here, proper protection of important information of internal matters of the company is needed prior to the commencement of work which involves the outsourcing job.

  • The build-up of new resources
    Another reason why outsourcing is needed is because of many great teams that can undertake a particular task efficiently. Mostly, companies choose to get the work done through outsourcing since it reduces the costs, and additionally, they are let off the burden of the repetitions that may arise otherwise.

    This only works when the company is very sure about what it expects from the outsourcing firm. The capabilities needed for proper outsourcing from the company’s part includes:

    – Identification of the best outsourcing projects
    – Managing good relations with the outsourcing department
    – Knowing the deliverable projects
    – Proper audit and seamless integration of the output of outsourcing into the company’s system

    Though the most general reason for outsourcing is expansion, some companies often miss the bus due to a compelling reason. Mostly the cost analysis of the company is proved wrong when they conclude that if the work is done internally, there will be lesser costs involved in it! And invariably, with so many tasks in hand already, it acts as a burden to the internal guys and results in a sub-standard output. So outsourcing here is important since they put in their best for a single job and are not unduly bothered by other company matters.

  • Keeping development costs low
    Minimizing the costs related to product development is a primary reason for opting for outsourcing. This without an iota of doubt is a better way of cost maintenance as compared to what the company people can do, like:
    – The expenditure incurred on employees, as in salaries, benefits, taxes, etc.
    – Other costs which are the training expenditure, space in the office, computer-related expenses, etc.
    – Other costs like management and human resource, which go hand-in-hand
    – Costs related to risky activities like legal expenses and unforeseen costs, etc.

    Besides, there are quite some irritating queries which go like:
    – How to build a good team for development within the organization?
    – What are the fields of expertise needed for this purpose? How much would it incur imparting it to employees?
    – How many members will constitute a team, and a team of what number will be required?

    After considering all these points, corporates often conclude that outsourcing is a cheaper option. But assigning such tasks to internal members possess some advantages like:
    – Exposing employees to new area of work
    – Getting a good review of the system
    – Following the industry norm

    Having said that, the internal members should be continuously trained for achieving higher results in this case.


Conclusion: From the above discussion, it is clear that outsourcing is a better option for developing new products for various reasons which are also mentioned above.

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