Many years ago, business owners understood the need for outsourcing. They realized that it would be impossible for them to fulfil all their needs by themselves and they would have to depend on someone else to serve some of their needs, providers that possess specialized skills to perform the task faster, cheaper and more efficient. However, this kind of set up did not work for most companies. They never relied on outsourcing to look after their sales, storage, transportation, legal affairs and taxes.
During Industrial Revolution in Europe around 1900s, there was a tremendous increase of production of goods and their market widened. Capitalists had to hire engineers and other skilled workers to put up their factories. That's when many companies began to outsource such activities like accounting, insurance, engineering, legal needs and other related services to specialized firms. By then, outsourcing was within the country and not offshore but it was exploitative and ineffective.
Middle of 20th century, socio-economic changes combined with the fast development of transportation and communication. Colonized Asian countries were released and directly benefited the developing economy by increasing employment opportunities. The skills and education levels improved, too. In early 1990s, several corporation and large companies began to outsource their essential services and even core activities. Time zone, distance and cultural barriers are no longer factors that impede outsourcing context. Outsourcing is now a vital part of any large organization.