No business can be established and operated from a cocoon. It has to take from the environment as well as give back. In this process of give and take, organizations perform various activities for each other on contract basis. A contract for performing a non-core business activity of an organization by another organization on a continuous basis is known as outsourcing. Outsourcing is a long-term contract. If all core and non-core activities were to be performed by the organization itself, it would need a sufficiently large workforce. This article discusses some aspects of outsourcing and also using it as an alternative to recruitment.

Organizations like human beings depend on each other for their survival and growth. No organization can be self-sufficient in all respects. It has to be responsive and interactive with various elements of the environment surrounding the organization. The organization has to rely on its suppliers and also depend on the organization to which it supplies. If a company seeks the help of other companies in performing one of its non-core activities—though not directly related to its business, but as a part of total organizational operations—it is known as outsourcing of that particular activity. Outsourcing is the use of a source outside the organization to perform a non-core business activity.

Outsourcing is defined as the allocation of day-to-day activities of a non-core business function to an outside party. The function allotted to the party is solely to be performed by that party. Here, it is worth discussing that purchasing goods from a vendor is not outsourcing, but assigning the purchase function to a specific operator who will be responsible for the supply of goods with pre-decided specifications at a specific price is outsourcing of purchase function. From where the goods are purchased is not the concern of the company as long as the goods are meeting the required specifications.

A cell phone company not dispatching bills to customers by itself, but forwarding all bills to another company for distribution through suitable method on payment of a fixed amount is outsourcing of bill distribution function. Here, the company taking the responsibility of bill distribution has the right to decide on the method of distribution. On the other hand, it will be held responsible for non-receipt of the bills by the customers.

The process of outsourcing starts with the organizational decision to outsource an activity. It is the onus of the organization to identify the specific activity it needs to outsource. Once the decision to outsource the identified activity has been made, the next step would be to invite proposals regarding outsourcing of the activity. The method of invitation would be at the discretion of the organization that invites proposals. After receiving the proposals, the next step would be to screen them. The organization will decide on the screening criteria and the screened operators are called for negotiations. This is a crucial step in the process of outsourcing as it would affect the final selections. Once the negotiations are scrutinized, the following step will be to finalize the organization to which the job will be outsourced. The selected organization is invited for the finalization of terms and conditions of the outsourcing contract. After the terms of the contract are decided upon, there is initialization of the performance of the contract of outsourcing. The organization that has shouldered the responsibility of performing the specific job begins its work. The organization which has outsourced the job analyzes and confirms the performance and the other organization starts providing the service on a continuous basis.

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