Catalysts for Outsourcing Trends

Today, business organizations across the world are struggling to compete not only for growth but mere survival. The factors responsible for this are the liberalized economies of countries across the world, globalization of businesses and recessionary trends in the markets. Moreover, the customer has become more demanding and is looking more for value-added services from prospective suppliers, as he wants value for the money he is spending. In such a situation, business organizations across the world, after reviewing their business processes, are increasingly realizing that cost cutting and differ­entiation in value delivery system are solutions to the current problem. This can be achieved through outsourcing the non-core operations to experts in the field and concentrating on core business areas. The expert can do the job both cost-effectively and efficiently. Hence, a growing trend observable in the industry today is a “hollowing out” of corporations. In other words, the large companies are increasingly outsourcing non-core business processes and gaining operating efficiencies and effec­tiveness by engaging the services of experts in that particular field.

Source: Sople V.V (2013), Logistics Management, Pearson Education India; Third edition.