CBSE Class 11-commerce Answered

Need for outsourcing

1)    Focussed attention: The process helps companies to focus on key areas or activities which are crucial for their success. This helps them to use their resources to the optimum.

2)    Quest for excellence: This enables companies to pursue excellence, first by working on their core competencies in which they excel and second by assigning the non-core tasks to those who excel in performing them.

3)    Reduced cost: Work is outsourced to professional agencies with ample amount of experience in those specific tasks. These agencies perform the same tasks for several different companies. Thus, client organisations benefit from cost advantage which arises out of increased output of production (economies of scale). This results in cost reduction for client organisations, thereby being cost effective.

4)    Fillip to economic development: Offshore outsourcing (outsourcing work to less developed countries) by different countries helps trigger entrepreneurship, employment and exports in the host countries. Example: The IT sector in India grew because of various outsourcing projects from various countries.