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Outsourcing: Advantages, disadvantages and the trends revolving around it

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Posted 3rd June 2010 at 02:04 AM by Citigo Sales

Outsourcing in recent years has become a hot topic that has been discussed by many people and been used by many companies worldwide. So what exactly is the meaning of the term “outsourcing”, its advantages, disadvantages and the trends revolving around it?
Outsourcing, in its simplest and easiest-to-get mean, is basically having another company in another country with much lower employees’ wages and production cost, through contracts, to perform a service or create a product that normally handled by a department in the company itself.

Advantages of Outsourcing
The first advantage of outsourcing is the cost savings it provides, which comes from the lower labors’ costs and favorable taxes. As a result, a company can make its products’ or services’ price more competitive in the market.
Another gain is the possibility to get access to a large pool of talents and expertise.

Disadvantages of Outsourcing
The 2 major disadvantages of outsourcing is quality and security matters which come from the lack and inefficiency of communication and the cultural differences. Experts are conducting a number of researches and studies about this in order to improve communication channels between offshore and onsite members.

However, with the lower cost associated, many companies choose to look over the setback as a trade off for the costs saved.

A more detailed explanation about outsourcing is available here.
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