Benefits of outsourcing

 

Outsourcing

Outsourcing can provide some significant benefits for companies. Advantages of outsourcing include:

Lower labor costs. Companies typically outsource to business  in developing countries where the  cost of labor is significant cheaper. Lower labor costs will improve  the company's bottom line. 

Less regulation  developing countries often have low level of regulatory restrictions, which can also reduce the cost of operations and increase productivity.

For example, there may not be limits on overtime or on work health and safety  issues.

Focus on core competencies.Companies that outsource lower -level work, or work the business is not optimized to perform,  can focus on the work activities at which they excel.this will increase  productivity, efficiency and effectiveness. For example tech company in silicon valley may  be better off outsourcing its manufacturing operations to a company's in China so it can focus on research and development.

Reduced overhead. Outsourcing can also reduce a  company's  overhead costs 

Because the outsourcing company uses its own facilities equipment and personnel to

Perform the work. In fact, its theoretically possible  to engage in massive manufacturing  ventures out of a room in your house  if you outsource  all the

Manufacturing to factory  overseas. 

Flexibility. Outsourcing means that you can stay lean and mean which makes it easier  to adapt to change. For example, you don't  have  to invest  a bunch  of money and resource into new plants and equipment  that may become  obsolete quickly instead,

You can pass that risk off to the outsourcing firms.