A trend that
has increasingly gained a lot attention and became popular is outsourcing. The
plan of outsourcing originated from the theory of core competence by the C.K.
Prahlad. According to this ideology, the business must identify its core functions
and competence and should be focusing on them only. This will give them the
success rate that they need. As for the non-core activities, it should be
handled by some other outside agencies or organisations.

In other
words, outsourcing is the contracting out of the non-core activities and work
to other agencies who are specialized in those areas. The aim is to benefit
from their expertise and also put all of their focus on their main activity.

Let us take
an example. The company ABC Ltd., whose main activity is to deal in electronic
products, wants to advertise some other brand of cosmetics launched by them.
For this, they will have to divide their focus between working with the
electronic products and advertising the new one. Instead of doing that, they
can hire an agency who is specialized in advertising, let’s say XYZ advertising
LTD., and they will do that work for them. This helped ABC to advertise their
new brand without compromising with management of the older one.

Here is a
list of benefits of the outsourcing process.

1.FOCUS ON
CORE FUNTIONS

As discussed
above, it becomes easier to focus on your own core functions and activities if
the side activities are given to someone else to complete. By this, better
utilization of human as well as physical resources is done.

2.SPECIALIZATION

It is
possible that if you do these non-core activities on your own them you might
not ace it considering it is not your forte. Contracting it out to someone who
is specialized in that gives you the benefit of their expertise. It guarantees
you that those professionals will do a brilliant job at it since it is their
specialty.

3.REDUCES
COST

Since, the
outsource agency are a master of what they have been told to do, they will
charge less for their services considering they are providing the same services
to a number of other companies. This will save up the cost of your company
since if you do it on your own then you might end up using a lot of extra money
as you are not aware of that particular area yet.

4.GROWTH

Outsourcing
is a collaborative learning process. Both the companies involved gets to know
more about each others field. Because of this, companies these days are not
only outsourcing their non-core or even core activities but also seeking the
benefit of knowledge from other agencies like Research and Development.

5.ECONOMIC
DEVELOPMENT

Outsourcing
not only helps the companies with its activities but also creates more
employment opportunities and entrepreneurship. Because of this, a lot of IT
sector has shown a tremendous growth in its employment and entrepreneurship.
Not just this, but it also increases the exports in the host countries,
countries from where the outsourcing is done.

Human capital is basically the amount
of skill, expertise, knowledge and experience instilled in people. It is
associated with the investment in the development of a man as a creative and
productive resource. It is the population that helps in the growth of the
country. For this, they need to be educated and trained. Their knowledge and
efficient work will prove out to be a great contribution in the economic
growth. This makes it quite obvious that the contribution of an educated person
is far more than that of an illiterate one. Therefore, it is necessary to
invest in the human capital formation. Here is a detailed description of how
human capital plays an important role in the growth of the nation.

1.EFFECTIVE
USE OF PHYSICAL CAPITAL

The physical
capital can only be created by the hard work and intelligence of an educated
man. The productivity of physical capital is widely depended on the human
capital available. Therefore, the human capital and their skills and efforts
helps in the effective use of the physical capital.

2.HIGHER
PRODUCTION

The human
capital increases the production and productivity because the knowledgeable
population will use the resources efficiently and effectively. Increase in the
quality and productivity can only be achieved by the high technical skills of
people which is only possible if they educated and trained enough.

3.TECHNOLOGICAL
IMPROVEMENT

The human
capital formation will prepare the generation for the upcoming technologies.
This means that they will be able to adopt the new technologies easily.
Education provides them with the knowledge to embrace the changes in their
surroundings both, economically and technologically. This will ease them out to
be introduced to new mechanizations.

4.MODERNIZATION
OF SOCIETY

The more the
people would be educated, the more the society will develop. There is no
denying in the fact that a lot of small towns and villages in India are still
backward and people are not very open minded. If people are educated and have
knowledge, they will grow personally and as a community. Their new ideologies
and perspectives will allow them to change their actions and move ahead of the
backward thinking. Therefore, investment in human capital helps in changing the
mental outlook and helps in the development of the country.

5.INCREASES
LIFE EXPECTANCY

More
educated people are more health conscious. They focus on their diet and the
nutrition they are absorbing. Being fit becomes one of their major agendas as
they are aware of the consequences of living an unhealthy life. This leads them
to have a longer life and also adds to their quality of life. Not just this
but, being educated also advances the health facility extensively and more
medications are being invented to help cure people with different diseases.
This also contributes to more people being fit.

6.CONTROLS
POPULATION

It has been
observed that the educated people have smaller families as compared to the
illiterate ones. They are aware of the population problem and know the meaning
of planning. Also, they know the methods of controlling their family size.
Therefore, more and more people must be educated so as to control the
population of the country.