Reduce or Control Operating Costs

The single most important tactical reason for outsourcing is to reduce or control operating costs. Access to an outside provider's lower cost structure is one of the most compelling short-term benefits of outsourcing.

Gain Access to World-Class Capabilities

By the very nature of their specialization, outsourcing providers bring extensive world class resources to meet the needs of their customers. Partnering with an organization with world-class capabilities can offer access to new technology, tools and techniques that the organization may not currently possess; more structured methodologies, procedures and documentation; and a competitive advantage through expanded skills.

Accelerate Reengineering Benefits

Outsourcing is often a by-product of another powerful management tool; business process reengineering. It allows an organization to immediately realize the anticipated benefits of reengineering by having an outside organization - one that is already reengineered to world-class standards/process.

Share Risks

There are tremendous risks associated with the investments an organization makes in information technology. When companies outsource they become more flexible, more dynamic and better able to change themselves to meet changing opportunities.

Shortened development cycles due to time difference

The development cycles are reduced as work almost happens all 24 hours as India has a 12 hour time zone difference with US. Yesterday evening's problem actually gets converted to today morning's solution!

Redirect IS Resources to more Strategic Activities

Every organization has limits on the resources available to it. Outsourcing permits the redirection of resources from non-core activities toward activities that provide a greater return in serving the customer.

Make Capital Funds Available

Outsourcing reduces the need to invest capital funds in non-core business functions. This makes capital funds more available for core areas. Outsourcing can also improve certain financial measurements by eliminating the need to show return on equity from capital investments in non-core areas.

Secure Resources not available internally

Companies outsource because they do not have access to the required resources within the organization. For example, if an organization is expanding its operations, especially into a new geography, outsourcing is a viable and important alternative to building the needed capability from the ground up.

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