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July 11, 2016updated 22 Sep 2016 12:45pm

What is outsourcing?

Outsourcing has a number of cost benefits.

By Ellie Burns

Outsourcing is a business process whereby one individual or business contracts out a job to another business or individual.

Dating back to 1981, the term stems from the phrase 'outside ressourcing' and can also involve the transferring of employees and assets from one company to another.

Usually businesses outsource in order to fill a gap or shortage in skills or resources. Due to this, outsourcing can save businesses money as less money is needed to hire and train specialised staff.

 

 

Outsourcing can also benefit an organisation’s budget as capital and operating expenses can also be reduced.

In order to further reduce expenses and increase flexibility, many organisations outsource to suppliers outside their country of operation, a practice which is called offshoring or offshore outsourcing. Usually contractors in countries where salaries are lower are chosen for outsourcing – the digital workforce of countries like India and China are a prime example of this.

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