Outsourcing: Can someone explain why this makes sense?

Question

If you outsource a company function like accounts receivable or human resource management to another company how does it make financial sense? the contractor company also desires to make a profit, cover overhead, manpower, taxes as much as the contracting company. Is someone not analyzing actual costs of outsourcing v. keeping it in-house? (this question pertains to functions that cannot be outsourced overseas such as customer call-centers or technical help-lines).

Answer 1

actually call centers are what is being outsourced... that is why they think it is more cost efficient... they work for pennies on the dollar and long rediculous hours. in the long run companies will begin to see that it was a bad idea because of the quality of service they are getting loses customers and looses money in the long run......

Answer 2

if another company specializes in something that really isn't a part of your actual business, it may very well be cost-effective to outsource those functions. and yes they really are analyzing the costs, people don't outsource jobs just because they woke up one morning and felt like it. lots of big companies use outside accountants and other such groups, ecause they can do it cheaper and better

Answer 3

Perhaps the company that the work is being 'outsourced to' can do everything at 'less cost' because that's 'all they do' ... and I know this because my husband happens to work for a company that gets all sorts of 'outsourcing' business. My husband 'doesn't like it' because it means he must do 'data entry' instead of 'making things look pretty' but that doesn't matter, because he also knows that he's not going to have to ALWAYS do the data entry, but he does know that he's actually helping another company's 'bottom line' ... which makes what my husband does at his company 'valuable.'

Answer 4

If you can buy something for less money than you can make it, this is business wise. US high cost of labor is a main driver behind international outsourcing.

Answer 5

Out sourcing only makes sense if you out source to countries where labor is very very cheap and the quality of people is the same or better than your own country.

Answer 6

simple big corporations who care only about the bottom line.... hire outside the usa to pay a small fraction to people what they would pay in the usa !!! it is a simple shame....