Outsaucing

yada yada yada... economies collapsing and the world crumbling to pieces... you want to know more about that? go google it! However, what I'd like to share about today is something i learnt in the past weeks - power of outsourcing.

Why do companies outsource certain processes out?

For easy visualization purpose:

Why would Coca Cola pay a delivery company to deliver bottles of coke from the factory to the end retail sellor?

Simply AND ideally put:

Coca Cola's main line of business would be to produce and sell Coca Cola, instead of spending their resources in distribution, they can concentrate on churning out more coca cola or come up with better ideas to improve processes, increase uptake or brand equity.

Delivery company comes in as a specialist, with distributions as their main line of service.

In economic theory:

Delivery company has a comparative advantage over Coca Cola, making them more efficient and allowing each party to achieve economies of scale.

So....
How can these be applied to everyday life?
Well, say your brother has to mow the lawn and you to wash the dishes... and you take 15minutes to mow the lawn but take 30 minutes to wash the dishes and vice versa for your brother. So by comparative advantage, it'd make sense for you to switch tasks!

This idea of outsourcing also nicely ties in with an idea from a book i've been reading:
the elephant and the flea by Charles Handy which is about how big corporates, elephants and slowly trimming down and outsourcing to smaller specialists - the fleas which is increasingly becoming a trend in this day and age.

I have yet to finish the whole book, however, from what i've read so far, it's a really insightful and refreshing book!

and why was the earlier part of my post in realy short staccato-ish manner because i wanted to bring twitter your attention!

okay.. i hope i've tied up the simple overview of outsourcing to you in both business overview and in terms of economics and tie in a book reccomendation!

did you also notice that...

when I'm linking out to wikipedia sites
that i am in effect outsourcing?