A Brief History of Outsourcing

Outsourcing may well be the latest buzzword in the global business world, but this phenomenon has certainly not been restricted to the last few years. If one has to trace the genesis of outsourcing, one has to go back to the time of the Industrial Revolution that took place between 1750 and 1900 across Europe. The period witnessed a mass production of goods, a widening market and spiraling profits like never seen before. Unable to handle all the functions that were demanding serious attention all at once, many companies wisely began contracting with third parties to take care of essential but tedious works like accounting, legal work, insurance to firms specializing in them.


The middle of the 20th century saw rapid strides in development, transportation, and technology, which gave a further fillip to the fledgling outsourcing industry. To increase their flexibility and profits, companies during the 1970s and the 1980s started focusing on their core competencies and began outsourcing the non-critical functions to those who had the time and the expertise to handle such tasks. These experts could be in the same city or in another country. It was only in the late 1980s that outsourcing began to be recognize as a sound business strategy. Since most companies were in any case not a hundred per cent self-sufficient, they had to outsource those functions in which they lacked internal competence.

Amongst the earliest businesses to enter the world of outsourcing was the publishing industry. Publishers were often forced to look to outside help for basic functions such as composition, printing, and fulfillment services. They used external suppliers for these crucial but nevertheless ancillary services, thus qualifying in a way as baseline stage in the evolution of outsourcing.


As the concept became popular and more and more businesses began to be aware of how much they could benefit from outsourcing, the next stage was outsourcing support services. This started sometime in the 1990s. Cost-saving became the keyword as organizations eagerly outsourced non-essential support services to qualified experts at a lower cost, thereby freeing their own manpower and other resources. Departments such as accounting, human resources, data processing, internal mail distribution, security, plant maintenance, and the like began to be regularly outsourced.

Around that time, economies in the developing nations began opening up. Among them was India. Thanks to the government's stress on education and development of information technology, India soon began to successfully woo the developed nations who were in desperate of need of low cost and talented workers. So, the IT revolution and the massive developments in computer technology played a crucial role to carry outsourcing to its next level.

Today, India has been universally acknowledged as the hub of the outsourcing industry. It is the number ne choice of more than 85% of US companies, especially when it comes to software development and IT-related jobs. Outsourcing to India may have begun with data processing, call centres and BPOs and medical transcription services, but today almost all kinds of jobs wing their way to India.

The face of outsourcing has changed as well. While the ubiquitous freelancer was hailed as the backbone of the outsourcing world, today, he has been ousted b y a new breed of workers the virtual employees. Enterprising outsourcing service providers in India are providing not juts a worker for a short-term project, but full-time, dedicated employees who ca handle large volumes of work, long-running projects and the like. Basically, outsourcing has also evolved into remote staffing, allowing a company in the US to experience having its own offshore office in India.

There may be voices raised in criticism of outsourcing, but it is an undeniable fact today - outsourcing is a necessity in today's global scenario. If a company has to survive, stave off the competition, make profits and grow it simply has to outsource.