Outsourcing is defined as sending job functions to an outside party instead of completing them internally. When a company is unable to manage everyday transactions efficiently or reach the target quota, it might be helpful to consider outsourcing.
In 2011, the United States Commerce Department reported that approximately 31 million U.S. employees of multinational companies work abroad. This number continues to rise as the fastest growing markets are outside the U.S.
Companies resort to outsourcing primarily as a cost-cutting measure, but it has advantages that go beyond this. A study conducted by Bain & Co. reports that the leading companies (out of the 2,000 companies that they have studied) use outsourcing in more strategic and innovative ways compared to the companies that do not have sustained and profitable growth.
Eighty-five percent of the leading companies utilize capability sourcing, outsourcing, and offshoring to improve client satisfaction, hone world-class talent, and bring fresh ideas and new products to the market faster for a thriving business.
Insufficient talent can be one of the factors that impede an emerging market’s growth. One way to solve the shortage is tapping into global talent. Aside from saving costs, this will cultivate fresh and skillful employees that can deliver positive results for the business.
Tapping global talent also widens market opportunities. A brilliant demonstration of this is AstraZeneca’s offshoring partnership with Chinese companies and universities, which eventually made it the largest pharmaceutical multinational firm in the industry of Chinese prescription drugs.
External collaboration can also lead to faster production, which subsequently increases revenue, especially among companies with in-demand products and services. Handing off work to the right set of people will also help in-house employees devote their time on strengthening the companies’ core competencies by setting and achieving new goals.