Need of Offshore Outsourcing

Offshore outsourcing continues to gain momentum in India. Though there are certain issues like security threats related to outsourcing, still companies are doing this business because they are impressed by the quality of work, results & offshore outsourcing initiatives taken by these countries. There are many reasons why companies continue to outsource. Some of them can be:

1. Capacity: Outsourcing priories an external source of capacity. Outsourcing proves to be a feasible solution when there is increase of work load & temporary sources of capacity are not sufficient. Offshore Outsourcing to India is preferable because it overcomes this shortcoming by the availability of highly talented professionals.

2. Know-how: Outsourcing may be necessary when the organization does not possess the technological know-how & a substantial investment is required to develop knowledge. IT government policies are very flexible in this regard which contributes a lot in outsourcing to India.

3. Cost & volume: When the cost of in house manufacturing is too high, or the volume of demand for a given part or service is too low to justify the initial investment in facilities, machines & training of the workforce, outsourcing is considered as a way to improve cost based competition. India, China, Russia & Philippines provide lower cost workforce for software development so companies find them as better place to outsource.

4. Demand Pattern: Companies go for outsourcing when the demand for the service is widely fluctuating or seasonal, in house manufacturing may not be justified especially if it requires investment in special equipment & facilities that might be idle for substantial part of the time.

5. Time Factor: One of the important reasons to outsource is time factor. Companies are not interested in spending their time in non-core activities. In such cases, outsourcing may enhance the time based competitiveness of the organization.

6. Quality: When the quality available from the software outsource vendor is better than the quality that can be obtained in house, then why do companies find any harm in software outsourcing. Recent surveys in North America have revealed the fact that quality obtain by outsourcing to India is the best till date.

7. Control: Since control is an essential tool in fighting uncertainty & poor planning, the reliability of suppliers as well as integration with the suppliers planning process are significant considerations in the make or buy decisions. Consequently, when outsourcing is used as a part of the order fulfillment process, proper supplier's management is an important task of the order of the fulfillment team.

8. Feasibility: Some companies have outsourcing as the only option. For example raw materials available only in foreign countries have to be purchased from outside sources & imported.