Outsourcing
Articles >> Business Outsourcing
Very simply business outsourcing can be seen as a process in
which a company delegates some of its in-house operations/processes to a
third party. Thus business outsourcing is a transaction through
which one company acquires services from another while maintaining
ownership and ultimate responsibility for the processes. The company
then informs its provider what it wants and how it wants the work
performed. So the company can authorize the provider to operate as well
as redesign basic processes in order to ensure even greater cost and
efficiency benefits.
The main motive for Business
Outsourcing is to allow the company to invest more time, money and
human resources into core activities and building strategies, which in
turn fuel company growth.
In today’s business
environment outsourcing is often not a decision that needs to be
justified. In fact some work that is handled internally but could be
outsourced can be seriously questioned as a bad business decision.
The global market today is highly competitive and continuously
changing. A company must thus focus on improving productivity and at the
same time cut down costs. Therefore, a lot of processes that take up
precious time and resources are being outsourced. Business
Outsourcing companies are often considered to provide more flexible,
faster, cheaper and effective services.
Business
Outsourcing helps free up a company’s capital and reduce costs.
The operations or processes being outsourced vary from manufacturing to
customer service to software development and much more. Most of the
companies that are looking to outsource are multinationals, or companies
from western countries, and most of the BPO units are in countries such
as India, China, Malaysia and even Russia.
One way of
looking at it is that business outsourcing is just a name for
already existing practices. Services such as, bureau services, contract
programming and project management have been outsourced for a long time.
In its present meaning, however, business outsourcing refers to a
greater level of handing over ownership and/or managerial control than
has before been the case.
Companies turn to resources outside
their organizational structure, usually to save money and/or make use of
the skilled professionals. For instance, a company might outsource its
IT management because it is cheaper to contract a third-party to do so
than it would be to build its own in-house IT management team. Or a
company could outsource all of its data storage needs because it is
easier and cheaper than buying and maintaining its own data storage
devices. A business might also outsource its human resource tasks to
another enterprise instead of having its own dedicated human resources
staff.
