In Outsourcing,
A Company hires regular service from Outside countries
instead of taking service internally from within the company or from within the country.
Example
AMEX (American Express) earlier had its call center in USA
It now outsourced it to India and hired Indian Employees
This has led to increase in savings for AMEX
What had led to increase in Outsourcing?
Outsourcing is the outcome of Globalisation
This Outsourcing has increased due to growth of IT (information technology)
Which Services are normally Outsourced
Voice Based Business Process (BOP or Call Center)
Book keeping (Accounting)
Banking Service
Teaching
Medical Transcriptionist
What are Benefit of Outsourcing?
Outsourcing is beneficial to both parties
- Business Outsourcing Work
- Foreign Companies do outsourcing to get reasonable skill at a cheaper cost
These companies save cost due to outsourcing
Example-
If they had to hire a call center employee in USA, they have to pay approx 400 Dollar per month
as his salary in India, they get similar employee at a salary of Rs 15000 (200 Dollar)
Country providing Service
These are getting work from outside India and earning profit
Indian Labour are also getting employment oppurtunities
Why is India chosen as preferred destination for outsourcing?
India has English speaking population\
India has very advanced IT
India's labour rate less
Good quality labour is available in India at a cheap rate
NCERT Questions
Question 10
Do you think outsourcing is good for India?
Why are developed countries opposing it?
View AnswerYes, outsourcing is good for India because:
- Indian people are getting employment oppurtunities
- Good quality employees are available in India at a cheap rate
- More companies will outsource work to India after seeing success of previous ones.
This will further improve India's image at International stage.
These are getting work from outside India and earning profit
Developed countries oppose it because:
- It leads to outflow of funds from developed countries to developing countries like India
- Also, the unemployment rate in developed countries increases as the work is outsourced
Question 11
India has certain advantages which makes it a favourite outsourcing destination.
What are these advantages?
View AnswerIndia is preffered as an outsourcing destination because of following reasons:
- India has English speaking population
- India has very advanced IT
- India's labour rate less
- Good quality labour is available in India at a cheap rate
MCQ Other Books
Question 1
In the following questions, select the correct answers
Outsourcing is good for India because:
- It provides employment to large number of unemployed
- It provides excellence in a particular field
- Both A and B
- Neither A nor B
C. Both A and B
Explanation
Why is India chosen as preferred destination for outsourcing?
- India has English speaking population
- India has very advanced IT
- India's labour rate less
- Good quality labour is available in India at a cheap rate
Question 2
It refers to contracting out some of its activities to a 3rd party which were earlier performed by the organisation
- A Outsourcing
- B Globalisation
- C Privatisation
- D Liberalisation
A. Outsourcing
Explanation
In Outsourcing,
A Company hires regular service from Outside countries
instead of taking service internally from within the company or from within the country.
Example
AMEX (American Express) earlier had its call center in USA
It now outsourced it to India and hired Indian Employees
This has led to increase in savings for AMEX
