Organizations have a wide range of reasons to look outside the traditional employee-employer relationship because there are so many possibilities for what to outsource and who to outsource to. It’s important to investigate why businesses opt to outsource.
Let’s analyze outsourcing in more detail, including what it is, why businesses do it, what are the advantages of works that are outsourced, and what it means for future business/projects performance.
What is outsourcing?
Outsourcing Definition
The term outsourcing refers to the contracting out of a business process to a third party provider. Business Process Outsourcing is a common term used to describe this , It is a process or service of the third-party to perform specific task or handle operations.
In its most basic form definition, outsourcing is a business practice approach. As part of the outsourcing business activity, a company may hire a third party to perform tasks, manage operations, or provide services on its behalf. Outsourcing is widely employed to let a business focus entirely on its major objectives.
Business Process Outsourcing
The most typical form of outsourcing is business process outsourcing. It alludes to outsourcing a company process to a professional third-party service provider. Processes like support processes, administrative processes, and/or non-core management processes that deal with repetitive activities are typically outsourced.
Outsourcing offers a highly effective tool used nowadays to increase the employment market and draw in talent from around the world. This eliminates the need for new hires to relocate. Additionally, the value of signing bonuses and other incentives for enticing and keeping the ideal applicant has decreased. It also allows companies to focus on their objectives.
What is the difference between outsourcing and offshoring?
When a business hires a third party to handle a certain task, it is known as outsourcing because the person employed has expertise in the task at hand. Businesses who offshoring move internal jobs elsewhere. Both may result in financial savings for a business, but only offshore refers to the act of moving work elsewhere.
The third party might carry out the processes that are outsourced on-site or off-site. The important thing to remember is that the contracted service provider must control workflow and job quality in accordance with the terms of the service agreement. According to the terms of the service contract, there are grounds for either correction or termination if the conditions are not met (both the quality and quantity metrics must be met).
Offshoring, on the other hand, entails the transfer of all corporate operations to another nation. Then, you are in charge of this function. Long-term management of your team members is something you are personally involved in choosing and doing. Due to Offshoring supporting a team in another nation is possible using shared services . They are your squad, and you have their entire backing.
As a result, referring to functions as being “outsourced” or “offshored” means entirely different things. It is crucial to be aware of the distinctive advantages that each model offers because some businesses tend to lose sight of this.
Three Types of Outsourcing
1. Project Outsourcing
Some companies need help in a specific project for a short-term objective. This is where project outsourcing is more convenient than to hire a temporary employee to do the task. Instead of recruiting a new employee, you can hire someone who specialize in the type of work you need to complete and expect a quality outcome.
The advantage of Project Outsourcing is you will have a fresh perspective on your project. When someone is outside of the company, they review every angle of the project and grab this opportunity to take leads. All ideas are fresh and will give your business multiple option to achieve its objectives.
Advantages:
- Access to diverse talents and specialized expertise.
- Rapid expansion of an in-house development team.
- Cost efficient.
2. Professional Outsourcing
Professional outsourcing involves a variety of services that need competent skill and relevant experience. This includes accounting pay roll, purchasing, marketing and administrative job. Businesses will save a lot of money when they only pay the services provided, not to mention the additional amount they can bring off for the benefits and incentives if you hire a new employee to your company.
In simplest term, Staff leasing. This setup allows you to hire someone without considering them as an employee and your business will save cost in terms of labor expenditures and other employee benefits.
Advantages:
- Save in employee benefits.
- Access to highly skilled professionals without maintaining them to the business.
- Compliance with the time set framework for administrative tasks.
3. IT Outsourcing
Among the types of outsourcing, IT outsourcing is the most marketable service. Instead of worrying about up-skilling your current and inexperienced IT professionals dealing with IT problems you can forward the tasks off to professionals, a project that may take months in-house can take a focus team only a few weeks or days.
One of the main benefits of IT support is the wider access of expertise and its financial savings you will bring off to your company expenditures. A quality IT outsourcing company will have staff with a range of experience and qualifications, and as such should always be able to find someone to help, whether it’s to assist with a short term or for a more long-term project.
Advantages:
- New ideas for projects.
- Access to high-end soft wares.
- Cost Reduction.
6 Factors Why Businesses Strategically Choose to Outsource
Reasons for Outsourcing
1. Lower Cost
Cost-Savings: businesses can save on costs by outsourcing certain operations; When a company decides to outsource, one of the most important factors is cost reduction. If a company examines inefficiencies, it can find ways to control operating costs and reduce expenses at least by 15%.
Outsourcing helps you to save costs in labor expenses, payroll accounting and employee benefits. It will help your business to step-up and maximize productivity without expending too much money.
2. Fast Deployment
Increased efficiency: businesses can improve their efficiency and focus on their core competencies when they outsource; No more worries concerning to benefits and employment screening. It will help the business to save time and effort looking for an employee that will fit to the job.
Every company takes effort to review all the application of each candidate in the recruitment process, it takes time to search for the right person to the right job. Outsourcing expedites you effortlessly to choose a staff that will benefitted to your business success and achieve its goal.
3. Secured Top Talent
Access to skilled labor: businesses can tap into a global pool of talent when they outsource; Outsourcing allows you to attract and employ world-class talent, increasing your chances of success. You can benefit from the advice of experts who has a relevant experience, highly skilled, innovative specialist and others by taking advantage of the best you can afford. In a finer way, you don’t have to make the effort to keep these experts working for you.
4. Technology Advancement
Businesses can be more flexible and agile in their operations when they outsource ; Another reason to consider is the technology, Outsourcing company acquire knowledge of innovative and cutting-edge technology that can follow the trend and help your business to grow and run smoothly.
Technology Advancement needs your business to invest in a higher cost, it means you will be needing a substantial amount to follow the latest technology for your business aside from that you will appoint extra employees to operate your system when in an instance you can just outsource it.
5. Flexibility
Your business may occasionally be obliged to keep services you don’t truly need since you employed permanent staff to provide them. This is the reason why outsourcing must be your option, as you can benefit from the services’ flexibility.
Regardless of the various time zones, outsourcing enables you to profit from the advantages of having your organization “alive” at all times. Company hires a foreign individuals to work for you in a certain service area even while you’re asleep.
6. Promotes Business Growth
Companies can grow their international commercial activities by using outsourcing. It’s now easier to enter a worldwide market if you’ve desired to for a while. Your worldwide staff can enter the local market through outsourcing. This is a chance for your company to become more well-known on a much larger scale.
Due to cheaper initial costs, you can easily accomplish your goal of business expansion. The cost of employee travel and relocation packages to work in your foreign offices is at the very least no longer your responsibility. This also means that you no longer have to pay for opening new offices or renting one in other branches where you don’t even have a physical office.
Looking for a BPO company?
Services Provider
PrimeOutsourcing is a Philippine-based offshore company service provider, involved in the BPO, IT consulting, and outsourcing industries.
- We offer a wide range of industry solutions including web design, web development, back-office support, seat leasing, web marketing, and contact center services for businesses looking to set up.
- We firmly believes that the collaboration of competent mind is what drives a business to achieved its goal, which is why we only hire individuals who have a great level of competency.
- We make sure that all our employees are highly skilled and responsible to perform their assigned job that will meet or even exceed the clients’ expectations.
Prime Outsourcing Services
Offshore Staff Leasing
Hiring new staff and managing human resources is a challenge for companies looking to expand their workforce. Business owners often have difficulty with tasks such as keeping records, doing payroll accounting, managing risk, and providing employee benefits. If you need employees but can’t handle these functions, you might want to consider staff leasing.
Our team is composed of highly skilled and qualified individuals with college degrees and extensive experience in their respective areas of expertise.
Project Outsourcing
Project outsourcing is the perfect way to outsource for businesses that want to get the job done, no matter what it takes. Outsourcing projects can help improve a company’s core competency, and save money on capital expenditures.
This is because the tools and resources needed to complete a project are already available, rather than having to buy new ones.
Our company takes pride in its staff’s ability to complete long-term projects. However, our professionals’ greater accomplishment lies in their capacity to finish a project within a specific time frame.
Even with a shorter amount of time to do a certain project, our employees can still complete all the requirements and provide output that each client will approve of.
Virtual Captives
Essentially, in a full offshore outsourcing arrangement, the client assigns aspects of their business operations to a service provider and permits the latter to manage the operations from start to finish. As such, the implementation of responsibility and the inherent risks involved are born by the third-party provider.
For this type of offshoring structure to effectively work, however, trust and proper relationship governance between the service provider and the client must be clearly established.
Virtual captive can also be considered as an incubation- or foundation-type business model, which is especially useful for startup ventures but can be used by established companies as well.
Prime Service Packs
More and more small business owners are turning to outsourcing as a way to focus on the most important aspects of their businesses. However, unlike large businesses that outsource most of their business processes for the long term, most small businesses have specific functions that require only part-time work. In essence, these small business owners would only want to pay for the outsourced functions only when they need them.
Advantages of Prime Outsourcing Services
- Bring off as much as 70% production cost.
- Save time and will give you a high chance to focus on expanding your business and improve internal efficiency.
- Hire staff directly at your own phase, the way you want and lead to which thing is best.
- Get ahead of the competition by having access to all the remote manpower and infrastructure you wish.
- Establish direct lines of communication with your team and plan the project workflow.
Learn more about us and find out how we can work together. Contact us now! Facebook: PrimeOutsourcing
