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The History, Development, and Advantages of Outsourcing

The development of outsourcing was given an impulse during the great Industrial Revolution between 1750 and 1990 in Europe.  According to Giao, Oliveria Junior, and Vasconcellos, three researchers from the University of San Paul, the terms “outsourcing” and “offshore outsourcing” were created by Ronald Coase, a British economist and author, who described the form of organizing business in his paper in 1937. But the “father” of outsourcing may be considered David Ricardo, a British scientist of the XIX century, with his economic principle of “comparative advantage”. However, an article published by Rose India Technologies considers it to have appeared during the first industrial revolution.

In the XIX and XX centuries, it evolved from the leasing of basic “blue-collar” jobs to the outsourcing of highly skilled services, so-called “white-collar” workplaces. The term white collar referred to the male office workers, who do highly skilled work, i.e., office jobs and management, historically called the “shirt and tie” set, as salaried professionals wore white formal shirts, but blue-collar employees were the class of wage earners engaged in hard manual labour in the construction, mining, manufacturing, agriculture who wore special uniforms or protective clothing in Western countries.

People of any profession are classified into a collar type, each with its symbolic meaning. Workers are mainly classified as white and blue collars, but there are a few more categories. “Yellow-collar” workers are creative people who do both white and blue-collar jobs, i.e., photographers, filmmakers, editors, and directors. “Red-collar” employees are considered all types of government workers, originated from compensation methods when government workers received their salary from the so-called ink budget. The term “gold collar” refers to highly skilled and knowledgeable people, such as doctors, lawyers, and scientists, as well as young workers getting parental support.

A number of companies started to outsource some activities, including accounting, insurance, engineering, and legal to specialized firms located in the country.  In the middle of the 20th century, political and economic changes led to the development of transportation, which resulted in outsourcing to less developed countries. Outsourcing was a long-expected development, that aided developing countries by increasing the employment and income levels of the workers. Besides, it improved education and skill levels too.

The improvement of IT and computer technology had a positive impact on the development of outsourcing. Thus, in those years, many companies started to outsource some of their activities, mainly data processing, human resources, and accounting, but they did not outsource their main activities.

Nowadays, due to globalization, even some large companies outsource their principal activities. Outsourcing has become a trend not only for large and medium-sized businesses but also for small firms and individuals and has become an indispensable part as a result of the profits it brings to businesses. And companies and organizations started to outsource nearly most activities, including human resources, research and development, logistics, legal, customer service, telemarketing, computer hardware and software, IT services, and so on. Outsourcing has been proven to be reliable and profitable for companies and individuals.

 

There are a number of reasons for the development of outsourcing services that companies use in their activities:

  • there is no need for keeping a full-time staff who are not required very often in the office, which means inefficient use of the company funds.
  • recruiting corresponding professionals is a time, money, and energy-consuming process.
  • even professionals you have hired are required to comply with both local and international laws and regulations and learning the new changes in the law necessitates trainings and courses, as well as additional time and money, which can take too much time and a lot of budgetary resources at times. Thus, it is better to use reliable and professional firms that can provide the services you need with only one click, i.e., by applying to professionals who will manage the tasks you need without fail, timely, and in a qualified manner.
  • better control and focus on core business activities.
  • a professional outsourcing company will help you to achieve cost savings to develop other areas of your business.
  • you can obtain capabilities and facilities that were previously unavailable to you, i.e., access to the latest technology, by having the opportunity to use better technologies and high-quality equipment improving profitability and efficiency.
  • it will help you to make your business more flexible and let you adapt to changing market conditions and challenges.
  • better risk management with a reliable and professional outsourcing company.
  • cost-effective offshore services, and so on.

 

However, there are hundreds of advantages to outsourcing, but there are also some disadvantages:

  • failure in service delivery.
  • confidentiality and security.
  • lack of flexibility.
  • changes at the outsourcing company leading to management difficulties.
  • instability, i.e., the outsourcing company may leave the market.
  • challenges while offshore outsourcing, such as hidden costs of provider selection, costs related to layoffs of local employees, as well as time zones, and different languages or cultures.

 

Comparing advantages with disadvantages, we see that both of them depend on the outsourcing company you cooperate with, and they can be easily avoided. Reliable and trustworthy professional companies including Financial Chain Corporation, will avoid all these disadvantages and ensure the services they deliver are timely, and in a proper manner and you can absolutely be certain of the protection of your information, as confidentiality is one of our priorities. Our services are stable, as a professional outsourcing company with years of successful experience in the field. The company having highly qualified staff functioning in different countries will have no time, language, or cultural barriers, and all services will be provided according to international norms and standards.

Financial Chain Corporation has been providing professional and high-quality services for 20 years in 13 countries and has been keeping its place in the market as one of the leading outsourcing companies, rendering Business and Outsourcing, HR Administration, Legal, and Audit and Assurance services both in Azerbaijan and in the countries where it has branches. FCHAIN has built confidence with the client companies cooperating with them for years and has become their long-term partner, contributing to the development of their businesses.

Client companies have no doubt about the results of the services provided by our company, as they achieved great results in the previous services, leading to the development and success of their organization. The numerous successes of the client companies are the best proof of our high-quality and professional services. By applying for our services, you will contribute to the success and development of your company.  So, apply for success and gain it with us.

 

 

 

Source:

https://www.supplychain247.com/article/what_five_great_economists_can_tell_us_about_outsourcing

https://www.investopedia.com/articles/wealth-management/120215/blue-collar-vs-white-collar-different-social-classes.asp

https://www.investopedia.com/articles/wealth-management/120215/blue-collar-vs-white-collar-different-social-classes.asp

https://www.nibusinessinfo.co.uk/content/advantages-and-disadvantages-outsourcing

  • Author: Nargiz Mammadova

Public Relations Manager

21.11.2022
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