Outsourcing is the business practice of hiring a party outside a company to perform services and create goods that traditionally were performed in-house by the company's own employees and staff. Usually done as a cost-cutting measure, it can affect jobs ranging from customer support to manufacturing to the back office.
Businesses can reduce labor costs significantly by outsourcing certain tasks. They can also avoid expenses associated with overhead, equipment and technology. A manufacturer of personal computers might buy internal components for the machines from other makers, for example, to save on production costs. A law firm might store and back up its files using a cloud-computing service provider, thus giving it access to digital technically without investing large amounts of money to actually own the technology. When used properly, outsourcing is an effective strategy to reduce expenses, and can even provide a business with a competitive advantage over rivals.
Like domestic outsourcing, international outsourcing saves businesses money by allowing work to be completed on a contractual basis by non-employees, and in a location with cheaper labor or supplies. But it may also eliminate the barriers encountered by a business entering a new country to establish local market share. These businesses may need native speakers of a particular language or those familiar the indigenous culture or those with some sort of specialized expertise, in the local laws or safety regulations, for example. Hiring directly may not be justified, budget-wise, so outsourcing becomes an effective cost-control solution.