Outsourcing is the contracting out of a business function to an external provider. In recent years outsourcing has gained widespread attention, particularly as online networking has allowed for easy contracting-out across international borders. However, the reality is that outsourcing has been around for as long as doing business has existed.
Businesses of every size outsource certain functions. The hiring of an accountant, for instance, is so commonplace that few people would even consider it outsourcing. However, as a business gets larger and more complex, an owner may increasingly look to bring in outside expertise. A rapidly growing business can use outsourcing to add expertise, either by introducing a new service or by contracting out a particular business function. For instance, a rapidly growing business could outsource payroll operations rather than develop an internal function.
Mature business may see outsourcing as a way to reduce costs and gain efficiencies. They may contract out activities that are already done in-house â€” such as human resources or information technology services â€” or they may find an outsourcing solution that can create a new customer benefit, such as a 24-hour customer hotline service.
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