Outsourcing consists of hiring a professional company to be responsible for a planned activity, in order to reduce cost, improve efficiency, increase competitiveness among the industry and enhance the company adaptivity to the changing economic background.
To gain competitive advantage from using traditional hiring method, the company choose to assign non-core activities to external organizations.
1. Outsourcing enables companies to focus on their core business and allows external professionals to make up on its weakness. From its own specific service and talent, arise core competitiveness.
2. Outsourcing optimizes a company's resource utilization. By opting outsourcing approach, companies concentrate the internal and existing resources on its core business. The outsourced professional companies dispose a more effective and efficient technology and knowledge of the specific area of industry. Outsourcing maximize the limited internal resources utility, accelerates the adaptivity to its environment, strengthen the organizational flexibility and agility of the company, thus increasing the overall competitiveness among the industry. Due to its benefits, outsourcing is being well received by all types of corporate and company. The first step is to identity the core business and centralized internal resources and then comes the outsourcing of the peripheral activities. Each team of a virtual enterprise is strategically positioned in the ensemble of the value chain, to maintain that position it needs pursuing its core function and outsourcing the peripheral. Take the example of Boeing, the largest commercial aircraft manufacturer, only manufactures the cockpit and the wing tip. Nike - the largest shoe supplier and manufacturer has never made a pair of shoes. This
mode of business allows enterprise not only to lower production cost of different parts but pushes one to continuously adapt to the changing market demand and reduces risk.
3. Business outsourcing reduces corporate risk. Effective outsourcing can reduce cost and risk. Shifting the risk to the manufacturing affiliates, which is the inevitable of branding companies.