Outsourcing is a term discovered by the information systems trade press in late 1980s.It was coined to describe the growing trend of large companies transferring their information systems to providers. Offshore outsourcing & software development took a pace due to the competition among the various companies. Earlier manufacturers in automobile industry have made component parts that were unique but when they became commodities the manufacturing units started outsourcing components to the offshore outsourcing services providers. In recent years, companies have been actively outsourcing information systems & technology, telecommunications, Management services & more. The list goes on. But it has proved more beneficial for IT & ITES sectors.
Outsourcing is the act of transferring some of the organization's recurring internal activities & decision rights to outside providers, as set forth in contract. As a matter of practice, not only are the activities transferred but the factors of production & decision rights often are too.
Outsourcing has proved beneficial for both the service providers& buyers as it is a way for an organization to increase its effective capacity without investing capital in facilities, machines & training. It may also be thought of a way to enhance the organization’s competitive edge in the areas of cost, time, quality & flexibility by selecting the best sources & by developing long lasting relationship with selected suppliers.
