Benefits of outsourcing for corporates:

Speed and skills: Access to specific skills task can be time consuming and costly where outsourced vendors overcome this challenge by having specialized skills at all times for quick access.. The outsourced vendors also have specific equipment, in most cases with optimal performance better than customers. Therefore; the tasks can be completed faster and with quality output. 

In addition, managing  projects in-house might involve taking weeks or months to hire the right people, providing equipment,  train,, and provide the support they need. And if a project requires major capital investments (such as building a series of distribution centers), the startup process can be even more difficult.

Focus on core process: Resources time and skills should be used in more productive way rather than spending time on tasks which are not a part of the core business. For example, outsourcing the supporting processes gives the organization more time to strengthen their core business process.

Risk-sharing and mitigation: one of the most crucial factors determining the outcome of any companies task is  risk-analysis. Outsourcing certain components of your business process helps organizations to shift certain responsibilities to the outsourced vendor. Since the outsourced vendor is a specialist, they plan your risk-mitigating factors with higher percentage of accuracy. 

Level the playing field: Small companies may not be able to afford to match the in-house support services that larger companies maintain. Outsourcing helps small firms to be sclaed and  act big  by giving them access to the same economies of scale, efficiency, and expertise that large companies leverage.

Control capital costs: Cost-cutting is a major characteristic of outsourcing to influence investors with higher profit margins.  Outsourcing converts fixed costs into variable costs, releases capital for investment elsewhere in your business, and allows you to avoid large expenditures in the early stages of your business.

Increase efficiency: An outside provider’s cost structure and economy of scale can give your firm an important competitive advantage. Companies that do everything themselves have much higher research, development, marketing, and distribution expenses, all of which must be passed on to customers.

Reduce labor costs: Hiring and training staff for short-term or peripheral projects can be very expensive, and temporary employees don’t always live up to your expectations. Outsourcing lets you focus your human resources where you need them most.

Service level agreement: A service level agreement (SLA) is a contract between an IT services provider and a customer, in measurable terms, what services the vendor will furnish. Service levels are determined at the beginning of any outsourcing contracts and are used to measure and monitor a supplier’s performance. It is beneficial to companies to meet SLA for their clients through outsourcing companies where they are responsible to provide SLA and will penalized if default. 

Reduced operational and recruitment costs: Outsourcing eludes the need to hire individuals in-house; hence recruitment and operational costs can be minimized to a great extent. This is one of the prime advantages of offshore outsourcing.

Conclusion:

Outsourcing is a business strategy that moves some of an organization’s functions, processes, activities and decision responsibility from within an organization to outside providers. This is a contract agreement with a vendor who takes on the responsibility for the production process, people management, quality, customer service and key asset management of the function. The outsourcing process can greatly reduce fixed overhead costs of an organization.