| Outsourcing is an important component to the | | | | method of capacity management of services and |
| growing division of labor, engulfing all societies. | | | | technology where the risk in providing the excess |
| Some countries are inherent with the ability to | | | | capacity is borne by the supplier. |
| outsource their business services to suppliers | | | | Factors like globalization, deregulation, increased |
| outside the nation, a process known as | | | | competition, inability to differentiate products, |
| off-shoring or offshore outsourcing. | | | | pressure to reduce costs by improving operational |
| In this context, India and China are considered to | | | | efficiency and even terrorist attacks have |
| be the two most popular countries which are | | | | coerced the insurance companies to undergo |
| known for low cost outsourcing. Both countries | | | | drastic changes in its policy systems. This |
| produce over 200,000 engineers and science | | | | transmutation has in turn contributed to the |
| graduates each year. | | | | growth of the insurance industry in the last few |
| Some of the reasons of outsourcing Research & | | | | decades. |
| Development works to India and China are: | | | | IT field defines outsourcing as either |
| 1. Cost-saving: They offer relatively lower over-all | | | | commissioning the development of an application |
| cost of services like reducing scope, defining | | | | to another organization (usually a company that |
| quality levels, repricing, re-negotiation, cost | | | | specializes in the development of this type of |
| re-structuring. | | | | application) or hiring the services of another |
| 2. Improved quality: They help achieve a step | | | | company to manage all or parts of the services |
| change in quality through contracting out the | | | | that otherwise would be rendered by an IT unit |
| service with a new service level agreement. | | | | of the organization (this might not include |
| 3. Access to talent: They have access to a larger | | | | development of new applications). |
| talent pool and substitute source of skills, | | | | Insurance OutsourcingServices provided by most |
| particularly in science and engineering. | | | | of the companies include a range of services: |
| 4. Capacity management: They have an enhanced | | | | |