by C. M. Erickson

Created on: April 18, 2008

A company "outsources" when it hires another person or company (source) outside its organization to perform work it had been doing itself. Companies typically outsource universal business functions such as bookkeeping, accounting, human resources, payroll, and data entry. The advantages to outsourcing are numerous, both for the corporation who it outsourcing and the business performing the outsourced work.

WHERE DID OUTSOURCING COME FROM?

Advances in modern technology in the past ten years have made outsourcing a viable alternative for many businesses. The advent of the personal computer, modem, internet, and internet hardware and software has made it possible for people to perform high quality work remotely from the main business office buildings. Advances in communication keep remote partners closely linked with the main corporation, ensuring that all information flows smoothly, expectations are clear, goals are met, and information security is maintained.

CORPORATE ADVANTAGE: THE ABILITY TO FOCUS ON CORE COMPETENCIES

Many small business owners and large corporations often outsource their accounting or payroll activities to allow them to focus on their core competencies that add value to the customer. The company sees great benefit in allowing other people to worry about human resources or bookkeeping, freeing their workers up to focus on their specific product or service that they provide to consumers. For each less worker performing data entry or correcting pay problems, they now have a worker to focus on design, innovation, or other functions that increase the corporation's value to the consumer.

For instance, a start up snowboard maker would outsource their accounting, payroll, and website design and maintenance because they did not understand those jobs well, thereby freeing themselves up to focus on the actual snowboard material composition, design, etc, which they were quite good at. By doing so, they hire experts in each field, which will create the best possible website, keep the best possible account of their money, and know the best way to pay their workers. They, in turn, are free to create the best possible designs and highest quality snowboards, thereby keeping customers happy and increasing their market share.

CORPORATE ADVANTAGE: INCREASED CORPORATE PROFITS

While many companies outsource locally, some larger corporations outsource internationally. These corporations seek workers in nations such as China, India, and the Pacific Rim, where wages and

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