How recession could be boon for outsourcing?
Written by admin on May 27, 2010
The recent recession (i would rather say economic doomsday) paralyzed the world economy. Such was its effect on the global economy that some very big names in the market were completely swept off their feet, for e.g Lehmann Brothers, the largest banking and financial services in the United States declared its bankruptcy. This was considered as the most dreaded economic downturn after the world war 2. With recession, many companies eroded their extra expenses but cutting costs and services in almost every manner. The phase saw many professionals losing their jobs, many organization their entity, and almost every individual worried. But beneath all the hostile artifacts, there was one sector that remain undeterred and unaffected. Interestingly, it grew rapidly and was the sole beneficiary of “Recession”. What was it? It was outsourcing.
During the period where even top MNCs were facing the ire of economic downturn, “outsourcing” went the other way. This term co relates to the definition ” Outsourcing involves the contracting out of a business function to an external provider”. It works on a theory, where two organizations may enter a contractual agreement involving an exchange of services and payments. Offshore outsourcing is another related term which refers to business proposition where the services an payments are outsource with suppliers outside the nation. Now the question arises, why is it the lone benefactor of the recession. Well, the answer lies within, the companies outsource some part of their business to an outsourcing agent – the reason can be either unavailability of resources required for the particular project, or to save cost and increase the revenue.
Things might be a bit more clear now, if we have a closer look at the pros associated with outsourcing, the major and the most important advantage is cost cutting. And cost cutting, is what was required in the “recession period”. We will take another instance to strengthen this, almost everyone might have noticed the fact that during the phase where companies were crumbling, and the jobs vanishing. Outsourcing was the only sector which was always looking for more and more employees, be it a BPO or KPO- pick up any newspaper and you will agree to this . Figures estimate that outsourcing in India witnessed a growth of almost 25% during 2008-09 (recession period) with approximately $ 400 billion investment. So, now we might have a better idea as to why the recession was a boon for outsourcing.
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