Take a good look at the society around you. You would find the existence of several organizations. For example, there are business organizations that produce goods or services. All these organizations exist to achieve pre-determined objectives. Though there are vast differences in their functioning and approaches, they all strive to achieve certain objectives. It must also be noted that organizations cannot achieve the objectives effortlessly. They are achieved through systematic effort. Several activities have to be performed in a cohesive way. In the absence of systematic and cohesive performance of the activities to achieve the objectives, it is no wonder that the resources of organizations would simply remain as resources.

Outsourcing is one such process, which can not only help in attaining the objective of the organization but can also help immensely in utilizing your resources. Thus, outsourcing can be defined as a business decision that can be made for quality or financial reasons. It is evident that the emphasis is on achieving the objectives by using the inputs like material, machinery, money and the services of men. These inputs are drawn from the environment in which the organization exists. Whether an organization is engaged in business or non-business, the various inputs are judiciously used in outsourcing to produce the outputs. This process which involves the conversion of inputs into outputs is common to all organizations.

Depending on the nature of business or activity that a firm is engaged in, the output of the firm may be a physical product or service. Since a business organization is an economic entity, the justification for its existence lies in producing goods and services that satisfy the need of the people. The organization draws several inputs from the environment, converts them into products or services and sends them back to the environment. Environment here means the larger system, i.e., the society in which the firm exists. Therefore, it goes without saying that how effectively the goods and services are produced is a matter of concern for any society, given the scarcity of resources.