The study finds out that outsourcing has become a strategic human resource approach in our current competitive business environment. Companies involved in the practice need to stick to their core competencies and go for strategic outsourcing to reduce cost and become more effective in their customer service. A company’s business success could be determined on how well it manages its outsourcing relationship. In general, organizations outsource to achieve cost reductions and/or to be able to focus on their core business. They also resort to outsourcing as a way to achieve more efficient, effective and competent functions in their processes. One of the fastest growing changes currently adapted by organizations is to outsource non-essential but critical functions to a large scale service provider, which is commonly referred to as Business Process Outsourcing or BPO. As the trends in outsourcing are evaluated, it is realized that the benefits of outsourcing far outweigh its disadvantages. Even as profits from the organization activities and Return on Investments increase year after year, it cannot sorely be attributed to outsourcing. Other factors like commitment, team work, reward recognition and employee involvements all play a critical role in the overall performance of the organizations. Institutions that integrate these factors with outsourcing achieve performance enhancement.