Outsourcing has become a fast-growing trend today among many organizations. This process works whenever an organization contracts with an individual or a company to carry out a particular task or function. These companies enter into a contractual or written agreement that involves exchange of payments and services that include medical billing and coding services, information technology or I.T. services, client services, janitorial, and security services. Typically, these non-core jobs or functions that are outsourced by the company are vital to the business.
For example, a telecommunications firm may outsource its janitorial tasks to another company specializing in the upkeep or janitorial services. Similarly, a hotel or a business may outsource its I.T. operations to a third party. These Outsourcing Services that does the job on behalf of the company are referred to as Third Party providers or Service providers.
Outsourcing and Economy
The concept of outsourcing manufacturing has been a subject of aggressive debate between economists, politicians and industrialists at their respective fronts. Contrary to prevalent belief, it has been seen that outsourcing could explore new ways of economic progress creating a number of job opportunities for many. The most common reason why companies prefer to outsource their services rather than hiring an employee is to cut costs and save on economically on other costs associated with hiring an employee.
A recent study has revealed that through outsourcing services, the IT sector has been able to generate a surplus new employment opportunities and slash the inflation rates. Outsourcing services also enables a company to focus on its core business and become more competitive in the global market arena by boosting their profits and thereby improving the nation’s economy.
Types of Outsourcing
The three primary types of outsourcing are:
Technology Services Outsourcing which include network infrastructures, electronic commerce, website development and telecommunications.
Business Process Outsourcing (BPO) which is considered the most popular among others and includes accounting, customer relations management, equipment, human resources (HR), procurement, logistics, documentations, security, healthcare, insurance, media and manufacturing outsourcing. This outsourcing is further classified into front tasks and back office tasks Knowledge Process Outsourcing (KPO) involves short term and peripheral projects like analytical advanced research and technical skills.
The most common business tasks that are outsourced are customer support, accounting, tax preparation, web design, computer programming, manufacturing, data entry, research & development, legal services, creative services, healthcare services and engineering.