- June 14, 2016
- Posted by: Henrikachi
- Category: ICS Insight
What is Outsourcing?
The term “Outsourcing” is among the most despised words in Nigeria; maybe third to NEPA and Police. It is not an easy feat trying to defend the concept of outsourcing. But many of those who loathe the notion of “outsourcing” might be surprised to discover that they, too, are “outsourcers”. Yes, we all are.
The study of human history reveals that even our forefathers, Homo Sapiens, divided their labour. Some were good at hunting, others maintained the caves. Some were good at cleaning the hunt. Others were good at raising offspring, or making clothes. The group who were efficient at certain tasks but bad at others focused on their strengths, and the division of their labour allowed them to produce more of their product or service than they might have been able to produce had they been forced to concentrate on myriad tasks. The excess allowed for trade, and trade allowed for competition, which, in turn, leads to even more efficiency in the productive system.
Yes, We All Outsource
Like our forefathers, we engage in division of labour, concentrating on what we do best, or enjoy doing most and by doing so, we compete with others, and lift productivity higher and higher. Every person involved in the division of labour outsources. If we did not outsource, we would not have enough time in our days to make the things we want or perform the services we desire performed. If I were to try to fix my faulty TV, it would take me months or years just to learn the rudiments of the process. If I were to try to grow all the food I want to eat, even while I had to get the water I needed to perform my home chores, it might take so much of my time to do the former that I would not have enough time to do the latter.
I find that 95 percent of the things we do every day can now be done by other people or other things, and being able to focus on the 5 percent that only you can do means you can stress less, reclaim your mind, and do the things you want to do. Housekeeping? Driving? Home tutoring for kids? Personal errands? The list goes on.
Why Companies Outsource
Just like we outsource from one person to another, we also outsource from people in one company to another. Companies employ outsourcing as a strategy wherein they contract out certain functions to specialised and efficient service providers, who ultimately become valued business partners. Some of the most common reasons include:
- Reducing and controlling operating costs
- Improving company focus
- Gaining access to world-class capabilities
- Freeing internal resources for other purposes
- Streamlining or increasing efficiency for time-consuming functions
- Maximising use of external resources
- Sharing risks with a partner company
Is this bad?
In conclusion, it is that focus on and exclusion of tasks at the heart of the division of labour which help us understand why “outsourcing” is not only ethical, it is natural, beneficial, and essential to human progress.