What is the Meaning & Definition of outsourcing

Outsourcing is a concept that is part of the business terminology. It could be defined as the strategy which is to hire another entity to provide a given service. Said in other words, outsourcing is equal to contract, though the term outsourcing is also used
The main reason for outsourcing or subcontracting is the reduction of financial costs. On the other hand, the outsourced company offers a greater specialisation in the sector. Let us take a simple example: a company dedicated to the transport of passengers contracted out to another for the cleaning of motor coaches. This strategy implies a transfer of employment, which can be used on a local or international dimension.
In terms of the general mechanism of outsourcing, the fundamental idea is that the contracted company provides workers the machinery and the infrastructure needed for the correct development of the service.
Labor outsourcing acts under the strategy of the delegation of functions and, of course, has its proponents and detractors.

In favour of outsourcing

External companies are specialized and consumers can enjoy better service in every way. According to the business approach, outsourcing is a strategic alliance that enables companies to perform tasks that are not specific to their sector. On the other hand, to avoid possible abuses in working conditions, some countries have imposed legislation which protects workers with this type of contracts.
Outsourcing is explained as a phenomenon of globalization, a reality that makes oriented economic activity with a broader vision. In this line, should not be forgotten that many small companies have been able to grow thanks to this trend.

Against outsourcing

This modality is usually accompanied by a negative effect on the conditions of employment and from the perspective of trade unions there is an infringement of the rights of workers. In fact, subcontractors regularly renewed staff so that they remain for long in the company and thus save holidays and all kinds of benefits.
This situation has given rise to some countries have banned outsourcing (the case of Ecuador is a very significant example). The absence of regulation in this modality of work is a threat to the workers, by what some consider the reality of the market and globalization can not go against the fundamental rights of workers.
Article contributed by the team of collaborators.

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