What does outsourcing mean?

23/02/2016

Definition of outsourcing:

To obtain (goods or services) by contract from an outside supplier; contract (work) out.

Outsourcing is the practice of having certain job functions or processes managed outside a company instead of having an in-house employee handle them, such functions can be outsourced to a company or an individual and are usually outsourced to countries such as the Philippines, India and Vietnam.

The Philippines is a popular choice and one Deployed uses exclusively due to the excellent spoken and written English of candidates and staff based there. It’s a trend that’s becoming more and more common for IT and other services such as digital marketing and accounting.

Some companies outsource their entire IT enterprise including planning and business analysis, as well as installation management, servicing of the network and workstations. But you don’t have to outsource everything, outsourcing can range from large contracts for companies such as IBM or Vodafone or a small business wanting to capitalise on efficiency and cost effectiveness.

 

How did outsourcing start?

Outsourcing can likely trace its roots back to large manufacturing companies that hired outside support to produce specialised components they needed for their products. Car manufacturers for example hired companies (outsourcing a process/product that the company themselves couldn’t supply) to make components for air conditioning units and sound systems for vehicles.

However, over the past decade the trend has moved towards outsourcing processes such as building websites and creating online content. Outsourcing offers many advantages such as significant cost savings but also allows companies to seek out and hire experts for specialised work.

Outsourcing can assist businesses with cash flow restrictions, and free up resources for other purposes such as sales. For small businesses if often means getting access to highly educated and experienced staff that they normally wouldn’t be able to afford locally, and therefore outsourcing becomes an important part of their growth strategy.

 

Here is a list of commonly outsourced roles and processes:

  • Call centers
  • Payroll and bookkeeping
  • Advertising and public relations
  • Digital marketing, SEO, SEM
  • Building maintenance
  • Consulting and engineering
  • Records, CRM (data) management
  • Supply and inventory
  • Security