Outsourcing of services is necessitated because of the following reasons
(i) Obtaining Good Quality Services A single company cannot have specialization in many activities. If a company attempts to perform all the activities itself, there is every possibility of the quality of services being affected adversely. In order to avoid this difficulty, the need for obtaining services from outside is felt.
(ii) Growth through Alliance If a company attempts to get these services from within the organisation itself, it has to establish different departments for this purpose. It involves a huge fixed investment. These services are available in the market at a little cost and that too, without any investment. Therefore, it appears justified to get these services from outside the organisation.
(iii) Quest for Excellence Outsourcing of services is needed in order to run the business smoothly. The attention of the businessman gets distracted from various small things and is focused on the main activity. In this way, the whole business runs efficiently and effectively.