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.
