I am convinced that you already are familiar with term “outsourcing”. This term becomes more and more common. Very often people know intuitively what that term means, but cannot explain it if somebody asks. Most of people, that I have met, don’t also understand why firms are so interested in this.
I have often heard the following question – why do enterprises pay for an external firm to do something that they are able to do by themselves? I have to admit that the logic may seem to have a point – if external firm is able to earn money on doing an activity for us, why won’t our company do this by themselves?
I am going to do my best to present that on the following example. Assume for a moment that you have a business which invents and produces new phones. You are thinking about outsourcing managed services- see more details. Consequently, you are looking for a rewarding firm which works in the area of mobile app development- . What will your firm gain if you decide to outsource?
First of all, you would save money. Developing new advanced producst will require hiring plenty of specialists which are very expensive as employees. This would be much more cost-effective to posses to outsource an external firm which specialises in this field and already owns experienced staff. As a result of, this is highly likely to be cheaper to outsource an external firm, than to keep proffesionals within the structure of your enterprise. This is one of necessary issue which makes companies decide for outsourcing. The major target is cost reduction. Surely, not the only one.
However, firms may cut down labor costs also by outsourcing services from the external firm that is based abroad. Definitely, it has to be country which has very well educated people but cheaper cost labor at the same time. I believe India is the best example of such country that is especially popular in such services.
At the end, outsourcign allows to enhance the quality of services. For instance, if you decide that mobile app development would be created by outsourced company that specialised just on this field, this would be definitely more successful than if it were developed by our employees who are not specialised in this narrow field of expertise.