Understanding Outsourcing

simply by Silicon Gulf

Understanding Outsourcing

Outsourcing is a term which has received a great deal of attention recently. Despite the increasing trend within companies relying on outsourcing there are still some who do not clearly understand what is meant by the phrase outsourcing. This article will examine some of the key elements of outsourcing to help the reader develop a better understanding of the concept of outsourcing.

Outsourcing Defined

What is outsourcing? This is the most basic question many have about the subject of outsourcing. They are not yet interested in more complex aspects of the issue because they have not however grasped the most basic understanding of the process. In the simplest language freelancing is when a company delegates the completion of certain jobs to an individual not employed by the company directly. This individual may be an independent contractor or an employee of another company who is subcontracted to complete these jobs. In exchange for the individual’s solutions, he or his organization receives monetary compensation.

this particular description of outsourcing makes it far easier to understand the concept. Most people incorrectly assume outsourcing just applies to situations where big corporations have products produced overseas by a subsidiary plus don’t realize examples of freelancing can be seen just about everywhere in business America.

Domestic Outsourcing

household outsourcing refers to outsourcing exactly where both the primary company and the independent contractor or part are located in the same nation. One of the main reasons for outsourcing is to reduce costs but it is not usually necessary to outsource work abroad to reduce costs. Cost savings will be discussed in greater fine detail in the section on the benefits of outsourcing but essentially freelancing results in a savings as a result of a reduction of labor expenses.

Overseas Outsourcing

Overseas freelancing is the type of outsourcing most people already understand. This is where big corporations such as Nike, and even some smaller companies, utilize manufacturing plants overseas in third world countries to upsize their own profits. This is significant due to the fact their costs including income, materials and building rent would be considerably higher in the United States than they are in these some other countries.

Benefits of Outsourcing

Now that you have a clearer understanding of the concept of outsourcing, you might wonder the reason why companies would go to the problems of outsourcing certain jobs. Outsourcing is popular because there are a great deal of benefits to the businesses who outsource the work. Some of the benefits include:

* decreased labor costs
* improved workforce
* Greater flexibility

One of the main reasons companies resort to freelancing is it can significantly reduce costs. In the case of overseas outsourcing of manufacturing tasks, costs can be reduce dramatically because there are lower income and costs associated with managing plus maintaining the manufacturing plants. However , companies also enjoy a cost savings when they outsource tasks locally. Reduction of labor expenses is the primary source of cost savings in this case. Independent contractors employed on a contract basis for the purpose of completing specific tasks are often not given benefits such as social security, Medicare plus workers’ compensation.

Another benefit in order to outsourcing is enjoying a larger workforce without actually employing additional employees. Companies that maintain networking relationships along with qualified individuals have mo

re possibilities open to them because they are able to rely on these individuals to assist all of them if they acquire large or even complicated projects.

Finally, freelancing gives a company a great deal of versatility. Companies who have a significant work load and backlog of work where the majority of the employees are highly used might be hesitant to compete for new work because they do not have a great deal of employee availability. However, with a network of individuals to rely on if the need to outsource occurs, the company has more flexibility within pursuing new work.


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