| Literally speaking, outsourcing is sourcing from outside. | | | | outsource supportive functions, you can concentrate |
| A simplest outsourcing definition would be - to contract | | | | better on your core business. Your work force also |
| with another person or company to carry out some | | | | becomes leaner. When you hire people, you need to |
| function. The idea of procuring a product or a service | | | | provide all the necessary facilities like office space, |
| rather than producing or doing it oneself is outsourcing. | | | | salaries and benefits. So, outsourcing provides you |
| One can outsource a process, a service, or a product. | | | | peace of mind and reduced liabilities, and yet quality |
| Businesses of all sizes are using outsourcing in various | | | | output. |
| forms depending on their business needs. | | | | Many companies, particularly the big ones, often prefer |
| Computer manufacturers often outsource computer | | | | to outsource complete set of operations to another |
| components from some other manufacturers - some | | | | capable company. They prefer it over outsourcing |
| even outsource their customer support departments. | | | | several diverse functions to many different vendors. |
| Pharmaceutical companies make extensive use of | | | | This type of outsourcing is popularly called Business |
| outsourcing when they contract manufacture of their | | | | Process Outsourcing (BPO) or Information Technology |
| products. Automobile companies outsource a lot of | | | | Outsourcing (ITO) depending upon the nature of |
| their components, rather than making them in-house. | | | | activities. In fact, most of this work is going to offshore |
| Public entities, such as municipalities frequently | | | | places like India and Philippines where salaries are |
| outsource activities like parking meter enforcement, | | | | much cheaper. |
| library management, legal services, pest control, etc. | | | | Some of the common functions performed by the |
| The vendors providing the outsourcing services are | | | | BPOs include: customer support; call center and |
| generally referred to as "service providers" or | | | | telemarketing, payroll maintenance, back office |
| "third-party providers". Generally these companies | | | | operations, human resources, finance and accounting, |
| specialize and focus in their respective area of | | | | medical transcription, etc. ITO activities involve IT |
| operation, so they offer superior quality. Attracted by | | | | related functions, like software development, data |
| quality and cost saving, more and more companies are | | | | center management, testing, quality assurance, etc. |
| outsourcing their general business functions, like data | | | | Some of the well known companies active in the BPO |
| entry, billing and payroll. Service providers carry out | | | | or ITO field are IMB, Accenture, HP, Genpact, Infosys |
| these functions more efficiently using their specially | | | | and TCS. |
| trained manpower and at lower cost. So, cost | | | | Quite in contrast to these mega outsourcing activities, |
| effectiveness is an essential ingredient of the | | | | outsourcing can be done at micro levels too. For |
| outsourcing definition. | | | | instance, if you like, instead of hiring an office assistant, |
| Typically, the outsourced function is a supportive | | | | outsource it to a worker who operates from home, so |
| non-core operation of a company. For example, a | | | | you now have a virtual assistant. In fact, you can |
| manufacturing company might outsource its payroll or | | | | outsource any work that involves computers or |
| landscaping operation to outside companies, since they | | | | telephones. Remember that the ideas of cost savings |
| are not related to their main operation. When you | | | | and quality are inherent in the outsourcing definition. |