What is Outsourcing? Outsourcing is a word which refers to the practice of contracting out functions or tasks to an external organization. Oftentimes, Outsourcing refers to hiring a third party company or business to perform certain activities for an organization. In some instances, organizations use outsourcing to reduce the number of internal employees, or they may use outsourcing to increase productivity and/or simplify certain processes. Regardless of the reasons, Outsourcing is a widely used practice, particularly in the U.S. Business Process Outsourcing Case Study.
Develop Your own Technology
How does an organization decide whether to hire an outside provider or to outsource? The most common reason to outsource is to take advantage of an organization’s in-house expertise, but this rarely works out: organizations usually need to retain the services of an outsourced provider, because they cannot afford to invest in training their own employees, and most offshore providers to offer highly qualified professionals at a very competitive price. Another reason why an organization might consider an in-house solution is when labor costs are extremely high, or when an organization needs to implement new procedures, or when an internal expert is unavailable.
How do Companies Outsource?
Most commonly outsourced work is those involving highly technical products and processes, such as computer programming, accounting, and health care administration. Customers are often reluctant to hire third-party experts, because these professionals tend to demand a large salary, with little benefit to the individual company. Moreover, most outsourcing agreements require that you contract the services of the outsourcing firm to a specific duration, even if you subsequently realize that the services that you bought are no longer required. In addition, customers frequently object to outsourcing because of high service charges and long hours of labor.
How does an Organization make Outsourcing work?
In a few ways, outsourcing makes sense. For one, organizations that outsource many of their routine tasks often save money in the long run because they do not have to buy products on a regular basis and maintain a workforce of full-time employees. This reduces overhead expenses and profit margins, which are something that every business owner strives for.
Outsourcing is That it Comes Without any Extra fees
One of the common misconceptions about outsourcing is that it comes without any extra fees. Some outsourcing firms may charge you for a certain number of hours of work performed, but this is generally a one-time fee and is minimal when compared to the cost of hiring another set of personnel for in-house employees. What is more, some firms may have the services of third-party contractors, but these are generally not necessary as their employees are highly trained, experienced professionals who know exactly how to operate their machinery and deliver results that meet or exceed your expectations.
Order to free up Resources
In addition, companies outsource in order to free up resources. When outsourcing certain processes, such as marketing research or accounting, companies are able to eliminate certain expenses which lead to a significant return on investment. For example, by eliminating the need to hire additional marketing or accounting staff, you will free up more resources for growth. As a result, it may be possible to increase sales or productivity while simultaneously cutting expenses.
Such as Receiving and Shipping Customer Orders
What is even more interesting to note is that outsourcing is not just done by large companies. For instance, a person who owns a small electronics store might outsource certain aspects of his store to another company that manufactures the same type of equipment. He might outsource his order fulfillment to yet another manufacturer. All of these steps decrease his workload. However, it is important to keep in mind that some aspects, such as receiving and shipping customer orders, are crucial to his business success. If he were to try to do this himself, he would face a number of obstacles.
An Information Technology Company Providing Knowledge process
A good example of an information technology company providing knowledge process outsourcing services is IBM. IBM provides both knowledge process outsourcing and information technology outsourcing services. In addition, it manufactures its own hardware, including laptops, desktops, servers, workstations, client machines, and its famed brand of “Think” operating systems. In recent years, IBM has entered the consumer computer market with its own line of low-end PCs based on its own information technology expertise.