Outsourcing is not new concept, but it is simply buying from outside suppliers. What is new is the amount of services the business are buying from outside. On the other hand it has been seen that these companies could easily and used to provide the services traditionally themselves. The shift is so pronounced – that the words outsourcing, sourcing and in sourcing which were unknown to service arena a couple of years ago, have become standard terminology.
The main focus for the companies is their core competencies where they can provide unique value to their customers and can achieve better results.
It has been well known that an experienced and expert can deliver more worth of task that too at a competitive cost. So the net result comes out to be a product with the minimum costs and with the best of the quality. The Companies are increasingly looking to suppliers that can leverage overseas labor supplies, creating a cost leverage without sacrificing quality, just as the manufacturing sector did decades ago.
This approach - focusing on core activities, selectively outsourcing others - crosses industry boundaries. For example, manufacturers use value-added distributors to increase customer responsiveness and supply-chain agility. Banks increasingly rely on third party partners to invest in new technology and optimize ever-shrinking technology life cycles. Software companies and airlines look to call centers to handle customer service. In all sectors, companies are eliminating outdated and bureaucratic back offices and outsourcing administrative functions to companies that specialize in that work.