Outsourcing: Overview and Trends

*Yingying Pang, Shishu Zhang and Albert Xin Jiang*

### **Abstract**

Outsourcing is a valuable strategy for firms to gain more benefits from the global supply chain. Outsourcing can be defined as a business agreement in which a firm is contracting out certain existing parts of the firm to either domestic and/ or international third parties. In this chapter, we give an overview to the benefits and disadvantages of outsourcing. We also discuss recent trends in outsourcing; in particular, with the benefit of technology development, robots are starting to join in outsourcing.

**Keywords:** outsourcing and offshoring, pros and cons, industry trends, past experience, future outlook

#### **1. Introduction**

Outsourcing is one of the current mainstream business strategies for firms to earn more benefits from the global supply chain [1]. According to [2], the U.S. outsourcing industry's revenue grew over 20 billion U.S. dollars from 2010 to 2019. Moreover, globally, the total outsourcing industry revenue increased from 93.1 billion U.S. dollars to 135.5 billion U.S. dollars.

With the blooming of outsourcing, academic researchers conducted studies to better understand the many aspects of outsourcing. To date, Google Scholar has listed approximately 390,000 articles related to the keyword "outsourcing" published since 2010. Although the researchers' interests in outsourcing varied, in recent years many researchers were focusing on outsourcing with Information Technologies [3–5], Logistics [6–8], and Education [9–11]. Researchers are particularly interested in outsourcing with Information Technologies [5, 12], including issues related to cloud computing [13–16] and security [13–15, 17, 18].

In the rest of this chapter, we will first give an overview of the historical background of the development of outsourcing, and the definition of outsourcing. We will then discuss benefits of outsourcing, including lowering cost, improving the focus on core competencies, receiving the best technology within the industry which the firms did not have, and increasing the employees' flexibility. We will also discuss the risks or potential disadvantages of outsourcing. We will also discuss recent trends in outsourcing, focusing on the impact of new technologies including cloud computing and artificial intelligence.
