Are you a small business firm? Do you ever wish you had more time to work on key activities serving more clients? What’s stopping you? What might be stopping you is that you are concerned that if you employed more people in your team it would be a huge impact to your fixed overheads.

Then again, perhaps you are not sure how to delegate more areas of responsibility to members of your team. Well outsourcing is the best strategy to expand your business to the level of your dreams.

Specialization is the norm in today’s economic world. In the past, you used to have people who were jack-of-all-trades and masters of none. Now you have programmers and play writers, pharmacists and paleontologists. The more advanced the society, the more specialization of its work force.

Hand in hand with the specialization of the work force, we have the specialization of the firms that operate in the society. Firms that used to do all things in a particular sphere (vertically integrated firms) no longer do so. They ‘outsource’. For instance, take a car manufacturer. There was a time when, at one end steel, rubber, and glass would go in and at the other end of the factory you would have cars rolling out of the assembly lines. All the raw materials would be transformed inside that one plant into cars. That was in the past. Now a car manufacturer assembles cars from components that are manufactured by other firms. A firm that manufactures engines will supply these intermediate goods to a host of firms.

Advanced industrialized countries or developed countries trade a lot amongst themselves. Much of that trade is in intermediate goods. Given that, it is hard to tell where something is really manufactured these days. For instance, consider the Boeing 777. Its engines could come from Europe, parts of the fuselage from Japan, avionics from the US, and so on. By the time you are done enumerating, you would find that practically the whole world was somehow involved in the manufacture of the plane.

That is what outsourcing is all about. You don’t do all the stuff that needs to be done. Get other to do it because they have a comparative advantage in doing that bit. American firms outsource much of what they need to do and a part of that outsourcing is done abroad and of that work done abroad, India has a good share.