1.) Lower Wages: As the saying goes, it’s all about the bottom line. Lower wages are a huge factor when outsourcing. The cost of quality labor is extremely high and creates a huge expense for the employers. If the same jobs were to be done at a far lower price by equally skilled personnel then it is definitely advantageous. The costs associated with an in-house employee are always higher than the cost of an outside service provider and this is the primary reason for most of businesses to opt for outsourcing non-core functions.
Possibly the most well-known reason to consider outsourcing is to access cheaper labor. Often these workers are not unionized as well, which further helps with cost cutting. Training new employees is expensive. Cost savings could be the biggest reason why businesses choose to look outside to hire the expertise they need. If work is being performed by someone who is an independent contractor, the company simply pays the amount agreed to in the contract. No payroll tax or other deductions are taken, which means that payment processing is streamlined.
Another way that outsourcing saves businesses money is due to the fact that the employer does not have to provide benefits to outsourced workers. Benefit plans are paid for by employers as a way to attract and keep quality workers, but they are expensive. If some work can be outsourced, it cuts down on this expense, which means that the business can operate more profitably.
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