How does outsourcing represent a new mode of business?
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Answer:
Outsourcing represent a new mode of business by following means :
Outsource means to engage the services of an outside agency to deliver and operate business activities process. For instance,a company may ask its accounts to be maintained by an outside agency . In modern world every company has adopted outsourcing of products/ services as a standard and ongoing practice.
The idea of business process outsourcing has its origin in the core competency theory propounded by CK Prahalad.
Needs of outsourcing :
1. Enhancement of business
2. Satisfaction of wants
3. Obtaining better quality
4. Cost reduction
In order to achieve the competitive advantage , the outsourcing of non competing or less efficient operation has become the need of the day. These outsourcing business had been growing at the rate of about 15 to 18 % per annum. It is expected that more than 40% of the fortune 500 companies and other multinational will also some part of the application development and maintenance activities.
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