2007-02-04 04:36:31 · 3 answers · asked by ravs_aryan 1 in Business & Finance ➔ Careers & Employment
a company may 'outsource' the business units that they previously may have done, like payroll, IT or HR to a 3rd party company that specializes in that field
2007-02-04 04:43:33 · answer #1 · answered by Michael F 5 · 1⤊ 0⤋
In a nutshell, it lets another company that is really good at something do a business operation or task that your company isn’t good at.
When something in a business is done routinely by a company, the things it knows how to do well are its "core competency" operations. Usually, when a company needs to do something outside of its core competencies, it is very time consuming and expensive.
Let’s look at an example of a doughnut producer that has about 40 employees. If you have ever owned your business or work for a company, you know that paychecks have a lot of different information on them. Taxes must be withheld from each paycheck, and government payment information must always be kept up to date. Keeping track of all of this information takes a lot of time. If you're a company that specializes in making donoughts, it is going to take a lot of time and employee effort away from making doughnuts and selling them for a profit.
We know that the more employees you have, the more time consuming it is to do payroll. So, most companies have an option: They can hire someone on the staff to take on the duties of payroll, OR - They can let another company step in and do it for them.
The cost of the employee at the doughnut shop would be around $40,000 per year, plus benefits. But, if we use ADP, the cost would be something more like $3,000 per year. Thus, letting another company handle this for the doughnut company makes sense. It would save them $37,000 per year.
Therefore, we can keep the doughnut operation “in-house” because we know how to make doughnus profitably, but let someone else handle payroll because they can do it better, cheaper and faster than we can ourselves.
2007-02-04 12:48:21 · answer #2 · answered by camrylev6 2 · 0⤊ 0⤋
they are american companies who give jobs to people in other countries so they can pay them less money than they would have to pay us.
2007-02-04 12:42:00 · answer #3 · answered by Lin_Z 4 · 0⤊ 0⤋