Outsourcing 2019-05-08 08:00:00


Outsourcing is a practice of a firm hiring third-party labor to replace services previously performed in-house. Firms typically use outsourcing to significantly reduce labor costs by enlisting the help of an outside organization that has the capacity to perform the service or production of a good at a materially lower cost. Outsourcing can also help a business to focus more directly on its core operations.

For example, when Apple first started producing the iPhone, it initially sought to achieve a vertical integration of its supply chain. However, the firm soon realized that a more efficient approach to the production of the iPhone was to outsource production of various components such as computer chips and screens to third-party companies. This decision allowed Apple to reduce costs by sourcing the help of outside organizations that may have already achieved scale in the production of a component. It also enabled the firm to focus more directly on innovation related to the active improvement of its phone technology.


Download The Guidebook To IPWM

Another Way To Own Investment Properties

Learn More About How Investment Property Wealth Management works.

Another Way To Own Investment Properties

Download The Guidebook To IPWM Investment Property Wealth Management
Download eBook