Outsourcing or also known as Subcontracting is a type of management in which if you manage a company at some point you will consider it as an option for those activities that you do not know how to do very well or that are very expensive to do.
Outsourcing consists of one company hiring another to do an activity.
Companies offering Outsourcing services may be in the company’s home country or may be abroad.
Outsourcing becomes an option when you are looking for ways to reduce costs, promote efficiency, basically allows companies to focus their efforts on their key activities and delegate those secondary activities that are not directly necessary for a company to deliver its value proposition to his clients.
One example are the companies that focus on what they really know how to do, such as Direct TV that provides a pay TV service, but has Teleperformance outsourced to answer customer service calls.
Outsourcing is born thanks to the economic differences that exist between countries. Factors such as minimum wage or specialization in one area, make it much more attractive to produce a good or service in one country rather than another.
Among the countries that most attract this type of outsourcing work are India and China, although also in Mexico it is a common practice since about 16% of the economically active population according to INEGI has a job of this type.
The outsourcing has many benefits, but it also has considerations and implications that have to be valued before adopting it as a strategy.
You have to establish first if you want to have all your key operations subcontracted, since it is not the same to react to the changes when all your operations are doing for you when you are doing them yourself.
The point here is that outsourcing is not bad if you know when to mark a line and not lose sight of the future as more attractive results are seen in the short term, because without realizing it you could be neglecting what made you competitive in the first place and generate a new competitor at the same time.