In times of globalization, specialization and efficiency play a decisive role in order to keep up with the international competition.
More and more companies source out their supported processes because they are seeking to realize benefits or address the
following issues :
Cost savings - The lowering of the overall cost of the service to the business.
Focus on Core Business - Resources ( investment, people, infrastructure) are focused on developing the core business.
Cost restructuring - Operating leverage is a measure that compares fixed costs to variable costs. Outsourcing changes the balance
of this ratio by offering a move from fixed to variable cost and also by making variable costs more predictable.
Improve quality - Achieve a steep change in quality through contracting out the service with a new service level agreement.
Contract - Services will be provided to a legally binding contract with financial penalties and legal redress. This is not the case with internal services.
Access to talent - Access to a larger talent pool and a sustainable source of skills, in particular in science and engineering.
Reduce time to market - The acceleration of the development or production of a product through the additional capability brought by the supplier.
Commodification - The trend of standardizing business processes, IT Services, and application services which enable to buy at the right price, allows businesses access to services which were only available to large corporations.
Risk management - An approach to risk management for some types of risks is to partner with an outsourcer who is better able to provide the mitigation.
Tax Benefit - Countries offer tax incentives to move manufacturing operations to counter high corporate taxes within another country.
Scalability - The outsourced company will usually be prepared to manage a temporary or permanent increase or decrease in production.
Creating leisure time - Individuals may wish to outsource their work in order to optimise their work-leisure balance.