Reasons for Outsourcing during Recession!

What could be the reasons as to one why should business estabishments be thinking in terms of outsourcing?
Various reasons!
As it is with all other forms of businesses, recession also has a huge impact on outsourcing and this impact on outsourcing can be as varied as the two poles!
During recessionary times, one sees that there is severe credit & fund crunch, businesses are likely to optimize whatever available resources they have and they would look at outsourcing option as one which could lead to sustained profitability because of the lower costs involved and 24X7 availability of the outsourcing vendor. Outsourcing is used as a strategic tool for a business to grow and not look at it as a mere tool for cost control.
Here is a small example of what it means:
For example John --businessman has an in-house accountant to record his daily transactions and prepare the monthly Income & Expense Statement for helping the John to take a strategic decision about his business. On an average, the hourly rate for an accountant (with less than 1 year of experience) is $14.14. The monthly fixed cost assuming a 40 hours week would be $2,262. And this is only for accounting. John in this case has to again shell out about $300 upwards for preparing his business's tax returns.
But if John decides to outsource his entire accounting function to an outsourcing vendor in India, at the lowest quote available for outsourcing accounting, he would be charged $1,280 per month for all services including the tax return preparation. Add to this, the benefit of getting highly professional reports on the current state of the business which would be far better than reports generated by an accountant with less than a year's experience.

So, cost wise, it makes sense to outsource accounting to outsourcing vendor in India. But doesn't that mean making one person jobless?

Not necessarily. The person's time can be split into: time to interact with the outsourcing vendor for reports etc. and time for the core area of the business. This would have two pronged effect on the person and the business:
a) The person would be able to generate additional direct revenue for the business and also learn a lot from associating with professionals at outsourcing vendor's office.
b) b) The business gets additional revenue while cutting down the overhead.
Thus by associating with an outsourcing vendor in India, you can do business without hurting your conscience!