Outsourcing refers to the handling of a particular function, of an enterprise, to a third party, that specializes in such function. Generally, outsourcing is done by huge MNCs, for the functions of customer services and feedback management. Outsourcing has emerged as a major component of the functioning of the big companies in the developed nations. Due to high cost of living and high standards of work culture and management, these countries choose to outsource their functions to countries where the requirements of quality and work culture are not high. Thus, there has been an increase inflow of capital and investment in the developing countries, in the form of outsourcing services. This has also caused a short term boom in the economies of the developing economies. However, it often comes with volatility of the capital, as these services are highly sensitive to the domestic and international demand and supply of labour and capital.
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