Outsourcing is not a new concept considering it has been in existence for quite a number of years now. However over the last decade or so its popularity has seen vast growth. In simple words outsourcing means using a third-party vendor to handle one’s business functions (mostly non-core ones) that would normally be handled internally by the company.
The chief principal of outsourcing is cost-cutting. Nonetheless in the recent times more and more companies are outsourcing in order to gain access to skilled expertise, achieve flexible staffing, focus on core activities, increase efficiency etc. Moreover some processes are seasonal and therefore a company might see fit not to hire internal staff to carry out these tasks. For the majority of small companies the decision to outsource is mainly taken because they might not have in-house experts to do so. On the other hand large companies do so in order to cut costs. In return an entirely new industry has emerged to provide these outsourcing services.
If a business process can be carried out from an outside location it can be outsourced. Such processes include but are not limited to call center services, accounting services and other tax compliance functions, data management services, transcription services, text and image editing/manipulations services. Once outsourcing has been implemented it is the responsibility of the third-party vendor to carry out the task.
A company can choose between selective outsourcing and total outsourcing. Selective outsourcing entails entrusting the third-party vendor with very specific business processes while total outsourcing entails outsourcing an entire department’s functions to an external vendor.
Prior to embarking in outsourcing any of your company’s component it is vital to assess the pros and cons of it since outsourcing offers your company a variety of benefits but it might also poses a number of difficulties if not wisely done. In the next article we take an in-depth look at the advantages and disadvantages of outsourcing.