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Outsourcing became a catchphrase in business areas in the 1990s. It was a well appreciated addition to the business lexis This market comprises 9 business functions of human resources, procurement, finance and accounting, customer care, logistics, engineering/R&D, sales and marketing, facilities operations and management and training. Outsourcing is a corporate strategy that companies adopt to enhance competitiveness of the company. By outsourcing non-core part of business operation and only concentrating on the core competence, companies can increase the productivity and efficiency in management.
Outsourcing as strategy is not new. Some examples of Outsourcing, such as GM and EDS, Xerox and EDS, Kodak and IBM, are more than a decade old. Over the years, the scale and scope of Outsourcing has evolved considerably. It has also migrated from primarily Fortune 500 companies to large and midsized companies.
Since the 1970s, many Western companies began manufacturing products in offshore locations such as Japan, Korea, Thailand, and Taiwan. Despite the relatively high cost of transporting the goods by sea and air, it was cheaper to make them in the Far East (and in Mexico after the NAFTA treaty) than to keep manufacturing in the United States or Europe.