Outsourcing

What is Outsourcing? 

 

When companies decide to implement cost-cutting measures, most of the time, they turn to outsourcing. Basically, this is the process where a company assigns job functions to third or external parties. Also called Business Process Outsourcing or BPO, this business practice can significantly improve the entity’s efficiency and increase its resources.

Types of Outsourcing

Professional outsourcing

    Professional outsourcing is undoubtedly needed by every business out there. For one, all entities need to be guided when it comes to legal, accounting, administrative, and purchasing matters. This type of outsourcing is common because you are only billed for the services provided to you. Compared to the salary plus additional benefits and incentives given to regular employees, professional outsourcing will definitely save you resources. 

    IT outsourcing

      IT outsourcing, on the other hand, focuses more on software support, maintenance, and development. Moreover, companies usually outsource functions that include data entry, disaster recovery, network management, and data center operations.  

      Manufacturing outsourcing

        This type of outsourcing involves hiring a manufacturing company in the same industry as your business to produce specific goods catered to your needs. Implementing this type of outsourcing will eliminate the need to purchase raw materials and hire factory workers. 
        The largest manufacturing companies globally include the Volkswagen Group, Toyota Group, Apple, and Samsung. To illustrate this further, large clothing brands like Uniqlo partner with factories in China, Vietnam, Bangladesh, and Indonesia for low-cost production.
        However, not all businesses do this to lower their cost. To maximize time, Apple outsources manufacturing jobs to countries like China, Korea, and Taiwan. So essentially, they do this for faster instead of cheaper labor. 

        Project outsourcing

          For jobs that require more expertise, executing product outsourcing is a wise resolution. This will be more cost and time-efficient than training an in-house employee to acquire certain skills for a specific project. And most of the time, you won’t need to hire remote workers full-time, thus saving you more money. 


          Process-specific outsourcing

            Process-specific outsourcing occurs when businesses contract external entities that specialize in specific services—for example, police officers and firefighters. Doing this will cost you less money than unnecessarily hiring full-time firefighters in your company.
             
            Process-specific outsourcing is not only limited to the services mentioned above. This is also applicable to businesses that do deliveries. For instance, manufacturing companies may choose to outsource their delivery services to third parties, mainly when they accept international orders.

            How to Outsource? 

            Offshoring

              Offshore outsourcing basically means hiring companies outside your country. For example, Samsung, a South Korean company, outsources a significant portion of its smartphone production to China.

              Onshoring

                Onshoring, on the other hand, is the opposite of offshoring. Here, you outsource specific business tasks to companies located in your country.

                Nearshoring

                  Lastly, nearshoring is a process that lies between onshoring and offshoring. This happens when you decide to hire companies geographically closer to you. Implementing this will help you reduce problems regarding currency conversions and time zone differences.
                   

                  YOU CAN LEARN MORE ABOUT SOME OUTSOURCING PLATFORMS THAT WE'VE LISTED ON OUR BLOGS HERE.

                  Reference: 

                   

                  Outsourcing Definition (investopedia.com)
                  What is outsourcing? Definitions, best practices, challenges and advice | CIO
                  What is Outsourcing | Outsourcing Definition | Ways to Outsource (sourcefit.com)
                  The 4 Types of Outsourcing: What You Need To Know To Get Started (timedoctor.com) 
                  Types of Outsourcing | Nearshore Technology - NearShore Technology
                  Different types of outsourcing that you need to know | Outsource Accelerator
                  The Pros and Cons of IT Outsourcing (journalofaccountancy.com) 
                  List of largest manufacturing companies by revenue - Wikipedia 
                  Different types of outsourcing that you need to know | Outsource Accelerator 
                  UNIQLO: What’s behind the low-cost high-quality casual wears? - Technology and Operations Management (hbs.edu) 
                  Apple's iPhone: Designed in California But Manufactured Fast All Around the World (Infographic) (entrepreneur.com) 
                  Definition - What is Nearshoring? - Tallyfy
                  Samsung outsourcing some production to China to compete with Chinese brands | Android Central