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History Of Outsourcing

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"Outsourcing is the strategic use of outside resources to perform activities traditionally handled by internal staff and resources”.

Outsourcing is a strategy by which an organization contracts out major functions to specialized and efficient service providers, who become valued strategic business partners.

Since the Industrial Revolution in the late 18th century, all companies put their best efforts to exploit their competitive advantage to improve their market share and their net profit. Most of the 20th century saw a model which was based on integrated big company that could fully manage its assets and processes. Late 20th century witnessed a new trend when certain big companies outsourced their many ancillary processes. This was done to increase their flexibility which was strained due to bloated management structures. Outsourcing was not recognized as a business strategy until 1989.It was year 1990 when large number of companies started outsourcing their various processes. This gave them enough space to concentrate on their core businesses. Initially it was started to save cost but later it became twin objective activity. This not only reduced cost but also increased quality as work was based on expert execution.

 

Evolution of outsourcing is passing through a stage which is based on strategic partnership. Companies are coming close in strategic partnership to outsource their most important processes precisely because they are so important.

 
 

 
 
 
 
   
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