Why is outsourcing helpful for businesses?

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thanatassa | College Teacher | (Level 3) Educator Emeritus

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There are several reasons why a business might find outsourcing helpful. First, it can serve to reduce costs, especially if a labour intensive activity is outsourced to a lower wage environment. Next, it can allow a business to focus on its core competencies. Finally, it can allow you to get functions performed for which are not economical for you to perform in house (due, often, to matters of scale or need for specialized expertise or equipment).

Imagine that you are an artist who designs and produces upmarket Christmas cards. You are an expert at drawing. To grow your business, you need to do marketing, shipping, order fulfilment, and accounting. You don`t have enough business to justify employing several staff members to do all of these in-house, and so you outsource these functions to an accounting firm, a shipping form, an order fulfilment firm, and a PR firm.

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