Titan - The Outsourcing Journey

Simply put, outsourcing means getting those things done outside that were hitherto provided for internally. According to the Outsourcing Institute, "Outsourcing is nothing less than a basic redefinition of the organization. Outsourcing suggests an organization focussed on a few, well-chosen core competencies supported by long-term outside relationships for many of its other activities and resources." An organization can outsource many functions of its day to day operations - manufacturing, marketing, human resources management, information technology services to name a few. It is thus a type of make-or-buy decision, wherein typically an earlier 'make' decision is altered to a 'buy' decision.

Earlier, when competitive pressure on companies was not very severe, cost management in manufacturing usually resulted in backward integration and gaining ownership of a large range of manufacturing and subassembly facilities. However, more and more organizations began moving towards outsourcing manufacturing for a lot of reasons. Outsourcing helps a company become flexible enough to terminate an operation if it does not meet the business goals without being concerned about various human resources, separation, or litigation issues. It is not necessary to build a fixed overhead infrastructure and the company can acquire and leverage customer acquisition expertise easily when it outsources certain activities.