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The past, present and future of outsourcing

Rahul Maingi

By admin, May 11, 2016

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Outsourcing has become a bit of a hot topic lately in the business world. Many savvy business owners see the trend toward outsourcing as a means to make their businesses more productive and profitable while others view it as a threat to their livelihoods fearing they will lose their jobs to cheap, foreign labour.


But the fact is, outsourcing is nothing new. Prior to the industrial revolution, most people were self-employed in some fashion or another and if you couldn’t do something yourself, you needed to “outsource” it to another. Of course back then, it was not called outsourcing – it was simply called commerce.

Outsourcing didn’t officially become a “thing” until much later.

Outsourcing Past

The 19th century saw many people go from being farmers and business people to being employees. Companies during this era tended to hire all the help they needed ranging from manufacturers working on the production line, to lawyers and accountants.

As the industrial revolution continued some services started being outsourced to other firms and smaller accounting, engineering and other professional companies started to form. Over time other operations such a manufacturing, payroll and call answering also became commonly outsourced.

Outsourcing Present

Today outsourcing has become quite common. Call centres are a prime example – many large companies today contract with call centres – either local or offshore. Unlike a few years ago, even offshore call centres use highly educated, fluent English speaking employees who are well-trained to represent the companies that contract with the call centre.

Other services such as bookkeeping, payroll and IT are also commonly outsourced.

The prevalence of outsourcing today has also provided many opportunities for individuals to start their own businesses. The freelance economy is growing as more people are learning to outsource themselves either full time or as moonlighters.

Outsourcing Future

Gone are the days when companies did everything in-house and gone are the days when individuals worked for a single employer for 40 years before retiring.

The digital age and the global marketplace have made it possible to collaborate with the best talent from all over the world and uncertain economic times mean that employees will often work for many different employers during their lifetimes. Many will also create greater income security for themselves by carving out a side business – in effect working as outsourced consultants for other companies.

By outsourcing specific functions to professionals outside the company, business owners can focus on what they do best and grow their company. In some cases there may be financial advantage in that outsourced labour is less expensive – but even if the base pay is the same, there is financial advantage of not having to pay for training, payroll taxes and other costs associated with keeping the position in-house.

All this means that outsourcing is going to increase. When you can recruit the best talent from all over the world, save money and give your business a competitive edge simply by sitting at your computer screen or working with an outsourcing firm, why wouldn’t you?

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