When one venture into business, whether it be a small business or a large company, they would often find out that it would entail accomplishing various tasks that are seemingly unrelated to the firm's core competencies. Hence you would see large companies such as P&G (a Fast Moving Consumer Goods company) or even smaller companies engaged in retail, trying to keep up with activities that are not directly tied up with their business, such as IT services, marketing, customer service and such.
When done “in house,” it is a big drain on the company when done in-house. Besides focusing on the things that they are already good at, they would also have to consider learning new skills and investing in new infrastructure. To tax the workforce and other firm resources, a good idea would be to outsource these things to other companies. Business process outsourcing is a growing industry because it has shown that it is a cost-effective way to make the company do their core competency better and ensure that their necessary processes are still being accomplished.
With Business process outsourcing, a manufacturing and retail company would not be burdened by training their factory workers or other employees to become Data entry clerks, Technical support Representatives, or Telemarketers. Outsourcing would also help lessen overhead costs as they would not have to purchase hardware such as telephones and computers, aside from those they would regularly need.
They would commission another company with knowledge and people who can do these things well and mold them into their own guidelines. Thus, the company would be able to focus on doing what they do best.
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