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Today’s Business Dilemma – Outsourcing
Outsourcing, the latest global phenomenon affecting the way business is conducted is
generally associated with hiving off various business processes to third party
companies. A recent report from Frost & Sullivan said that outsourcing, a $930-billion
industry in 2006 is poised for 15% annual compounded average growth rate over the
next three years to $1.43 trillion. This is not a small figure by any stretch of
imagination. It also said that during 2006 the top three spenders on SSO (Shared
services and outsourcing) viz. banking, financial and insurance (BFSI) sector with $273
billion, Technology and ICT at $233 billion, and Health-care at $130 billion, accounted
for more than 50% of SSO spending. Other areas that are heavily involved in
outsourcing included transport and logistics ($113 billion), energy ($84 billion) and
fast-moving consumer goods (FMCG) at $59 billion.
Managers, the world over face this dilemma - whether to outsource or not, where to
outsource, whom to outsource and how to maintain an outsourced activity. This article
will analyze issues related to outsourcing.
Introduction:
Outsourcing is as act in which some of a firm’s internal activities are moved to a
service provider. Offshore outsourcing is also an act of outsourcing services to a
foreign country. Conversely, insourcing is an act of internal sourcing of activities
within the firm and offshore insourcing is done in a foreign country but in a firm
owned by the same client firm. Apart from offshore outsourcing there are different
types of outsourcing like near shore outsourcing (outsourcing in a neighbour country),
back sourcing ( ...