Is outsourcing a fad, a management tool, or an economic necessity?
Ronald Coase established in 1937 the theoretical framework as the basis for outsourcing. Coase was awarded the Nobel prize for economics. He states that when the internal cost of processing a transaction exceeds the market price, the transaction will tend to be processed externally. We suggest that outsourcing is an economic necessity and that it affects mostly parts of the business not normally exposed to market discipline forces (IT, HR processes, Supply Chain processes, Accounting processes, e.t.c.).
