Outsourcing definition

With businesses going global and expanding their range in every niche, business trends have changed exponentially. With this came the concept of outsourcing.

Outsourcing definition: it is a business practice in which job or service functions are contracted out to a third party. In IT, an outsourcing plan with a technology provider may include a range of operations from the total information technology to discrete, like network services, disaster recovery, QA testing or software development.

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Depending on the requirements, companies may outsource these IT services onshore (within their own country), nearshore (to neighboring country) or offshore (to a distant country). All these outsourcing systems have got their own pros and cons. Nearshore and offshore are basically taken into account to cut costs and save major amounts on these services.

To gain skills and services small and medium-sized businesses will find it hard to develop, either because of financial or manpower restrictions or it may be a combination of both. It means that you can grow your business whenever you need it, without any big investment.

Outsourcing Companies

You cannot be adept at everything of course. Sometimes you simply need to take help from professionals in other relevant field so as to carry your tedious tasks. This is the place where outsourcing companies come in. These professionals basically lend their expertise and skills to your company by offering value-added services, which make your work easier and efficient.

Choosing the perfect outsourcing company to assist you is a big commitment. You need to ensure that it will deliver quality service and will improve company’s performance. Your service provider can also be your efficient business partner as it may help you with a lot of business processes coming under their services.

However, with so many outsourcing companies in the market, it may become a daunting task to choose a particular virtual assistant for your business. So the question is, how would you sieve through all these options for outsourcing your work?

Well, there are some important characteristics you need to look for when searching for an outsourcing partner to do business with, like:

  • A range of Services offered
  • Cost of outsourcing
  • Experienced professionals
  • Efficient customer support
  • Complete disclosure

Now that you know what outsourcing, is how you need to choose one, it is important that you know the advantages of outsourcing before you take a step forward to it.

Benefits of Outsourcing Business Processes

There are a lot of benefits to outsourcing your business processes to destinations across the globe.

Some of them are:

Cost Benefits

The first benefits relate to the cost savings that outsourcing may bring. You can simply get your job done at a very lower cost and at a better quality too. Because of the difference in wages between Asia and Western countries, the similar kind of work which is done there can be done in India at some fraction of the cost. This comes down to a saving of around 60% by outsourcing your work to India. Additionally, the quality of the services offered ensures that low cost does not account to low-quality.

Enhanced efficiency

When you outsource your business need an efficient outsourcing partner. This professional outsourcing staff have expertise in business practices and delivering complex outsourcing projects. Thus they can do better jobs with their knowledge and understanding of the business domain. This increase the productivity and competence in the process by contributing to the bottom line of your company.

Save on Technology and Infrastructure

Outsourcing excludes the need for any investment in technology or infrastructure as the hired company takes the proper responsibility of the business processes and thus develop infrastructure for the same.

Concentrate on Core Areas

Outsourcing your business processes free your energies. This also enables you to pay attention to building your brand, invest in development and research while moving on to provide higher value-added services.

Time Zone Benefit

Besides cost savings, another huge advantage is the time zone difference between your country and the area you are outsourcing to. Simply get your job done and you are closed for the day. And when you wake up the next morning, your work is delivered to you. The exclusive advantage it gives is, round the clock business operations.

An Approach to Skilled Resources

There is no longer need to invest in training expensive and recruiting resources for your business. Providers take care of the resourcing needs with their skilled resources. The outsourcing companies are now well educated in the respective business areas. These are experienced in handling the business needs of the companies that may want to outsource. Additionally, outsourcing companies employ world-class business practices by catering to customers across the globe.

Quick and Better Services

Make your service offerings even better with the quality deliverables. This will decrease the lead time that it takes for your product to reach the marketplace.

Major Outsourcing Services

Since outsourcing has become a wide sphere, there are a lot of services included in it. Here is a list of all the major outsourcing services:

IT Services Outsourcing

IT outsourcing includes outsourcing of software development. This may take end-to-end outsourcing where all the activities related to development, design, and testing are outsourced. In other cases, just a part of the overall system is outsourced for the development. This is in those cases where the client has not requisite skills for the development work.

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Healthcare BPO Outsourcing

On the table: Laptop, outsourcing services contract, phone, glasses, etc.

Medical outsourcing includes a wide range of HIPAA compliant services. These may involve:

Medical Coding and Billing Services

These are the services delivered while using most popular billing software like Lytec and Medic.

Medical Transcription Services

These may include services like transcribing information from a wide range of audio sources and file formats like MPG, MP3, WMA, DSS, etc.

Call Center Outsourcing

Typical call center services include:

Inbound Call Centre Services

These basically include answering the services that may available 24*7. Call center agents can be easily trained to cross-sell services, take services and offer information on the advantages and features of services and products.

Outbound Call Centre Services

These involve services like lead generation services, telemarketing services, and market intelligence services.

Technical Help Desk Services

This involves technical after-sales support for services and products.

Knowledge Process Outsourcing (KPO)

A KPO basically offers domain-based processes and employ advanced analytical skills and business expertise instead of processing expertise. Some of the research services include:

Web-Based Market Research

These services help in collecting information from different websites. In comparison to the primary research where data is collected from respondents, data is simply collected from secondary sources like newsgroups and government publications.

Financial Services Outsourcing

These financial outsourcing services include:

Bookkeeping Services

These include the preparations and maintenance of day to day books and quarterly accounts. This also includes preparations of a variety of reports like sales reports.

Accounting Service

These involve preparation of financial statements for statutory annual audit, payroll services, and cash forecasting services.

Financial Analysis Services

These involve analysis of financial information like financial statements, offer documents and portfolio structures.

Data Entry Outsourcing

Be it big, small or medium-sized organizations, all have data entry requirements, Data outsourcing can be divided into:

Online Data Entry

These include services like a compilation of data from e-books, websites, a creation of databases and updating online catalogs.

Offline Data Entry

These involve services like form filling, offline data capturing, MS word document data entry, data entry from one version to another, etc.

Human Resource Outsourcing

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Human resource is a lot more than hiring and firing. This includes recruiting administering benefits, new talent, designing recruitment plans, implementing health insurance and a lot more. When you outsource a company specializing in human resource, you lessen your burden of all these organizational duties. There are a lot of companies providing outsourced human resources assistance and services.

Accounting and Payroll

This is one such function that causes the most of the anxiety in a company. When you keep track of the payables, payroll, receivables, employee deductions and quarterly tax payments, there is no end to the list of the required tasks. If you shop around you can see reliable and affordable outsourced talent to help with all of these functions. No matter you use a local bookkeeping service or some large company, each outsourcing company offers their own benefits. In fact, there are a lot of companies that offer your employees some features like direct deposit and more.


Outsourcing challenges the relations with a third company partner – the local and domestic communities. By moving production and the jobs abroad, outsourcing has an overwhelming effect on both the levels that often unleash the ideological and political waves. This may reverse all the profits from outsourcing. It is important to remember that people living in these communities are not just workers, they are citizens and consumers too. As citizens they may end up supporting the legislation, increasing the business costs in their community. And on the other hand, being consumers they may end up boycotting the corporate products which may move from one location to another, in order to cut costs and increase profits.
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Related articles:

Outsourcing Definition and Benefits of Outsourcing
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Outsourcing Definition and Benefits of Outsourcing
Outsourcing definition: it is a business practice in which job or service functions are contracted out to a third party. In IT, an outsourcing plan with a technology provider may include a range of operations from the total information technology to discrete, like network services, disaster recovery, QA testing or software development. Read more ...
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SITO: Software & IT Outsourcing
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