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Day 9 – Q 2.What is outsourcing? What purpose does it serve? Which countries are the major destinations for outsourcing and why?

2. What is outsourcing? What purpose does it serve? Which countries are the major destinations for outsourcing and why?

आउटसोर्सिंग क्या है? इससे कौन सा उद्देश्य पूरा होता है? आउटसोर्सिंग के लिए कौन से देश प्रमुख स्थान हैं और क्यों?


Outsourcing is the business practice of hiring a party outside a company to perform services and create goods that traditionally were performed in-house by the company’s own employees and staff.


Purpose of Outsourcing:

  • Cost reduction: To reduce labour costs significantly. Businesses can also avoid expenses associated with overhead, equipment, and technology.
  • Companies can employ an outsourcing strategy to better focus on core aspects of the business.
  • Outsourcing non-core activities can improve efficiency and productivity because another entity performs these smaller tasks better than the firm itself.
  • Gaining access to world-class capabilities.
  • Gives flexibility in staffing, manpower and management.
  • Availability of skills like skilled staff with good English in India.

Major countries which are destination for outsourcing are mainly developing nations like India, China, Eastern Europe, Philippines etc.

Major reason for outsourcing to developing countries are:

  • Skilled Manpower and Cheap Labour.
  • Lack of environmental laws.
  • Lack of labour laws.
  • Supportive government policies.
  • Demographic dividend.
  • Market access.

At the same time, outsourcing has certain negative impacts on the overall economy.

  • Exploitation of labour.
  • Environmental pollution.
  • Uncontrolled urban growth causing various issues related to socio-cultural, infrastructure, health, settlement etc.

Note: These above points need 1-2 lines explanation.


Outsourcing brings opportunities to the developing countries like India. Best example can be growth of Bangalore city, which was majorly due to IT related outsourcing. But along with that it brings out its own set of challenges which needs to be tackled by the policy makers.

Best answer: Neha Kumari.

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