What is outsourcing?

Outsourcing could be defined as the shifting or delegating a company's day to day operations or business process to an external service provider, done in anticipation of a better quality, lower rates and in a sense getting an edge over one's competitors. When a company's operations or business processes are outsourced to firms in foreign countries, often to take advantage of cheap skilled labor, it is referred to as Offshore outsourcing or Offshoring.

Where functions previously performed by an organisation are supplied under contract from a third party.

Buying goods or services instead of producing or providing them in-house.

While outsourcing is not exactly a new innovation, the shifts that have occurred recently in this space are worth noting. As the need for e-learning moves higher up on the IT and corporate training agendas, organizations are wont to take on the IT management burden of implementing a learning management system (LMS).

The concept of taking internal company functions and paying an outside firm to handle them. Outsourcing is done to save money, improve quality, or free company resources for other activities. Outsourcing was first done in the data-processing industry and has spread to areas, including telemessaging and call centers. Outsourcing is the wave of the future.

A long-term, results-oriented relationship with an external service provider for activities traditionally performed within the company. Outsourcing usually applies to a complete business process. It implies a degree of managerial control and risk on the part of the provider.

The transfer of components or large segments of an organization's internal IT infrastructure, staff, processes or applications to an external resource such as an Application Service Provider

http://www.offshoringtimes.com

Types of OutsourcingOne challenge every business enterprise faces nowadays is to find niches that generate the

most income. Several companies are wary to venture on additional expenditures that do not

promise considerable yield. This is the main reason why companies resort to outsourcing

activities. Outsourcing is divided into three types: technology services

outsourcing, businessprocess outsourcing and knowledge process outsourcing.

Technology Services Outsourcing Due to the fast-changing world, business enterprises find it necessary to invest on

sophisticated technologies and systems. Technological innovations are fueling the rapid

evolution of business and economic models. Companies have to adapt to these changes in

order to thrive in a competitive market. Some of these technologies include electronic

commerce, network infrastructures, applications, telecommunications and website

development. Investing on a whole new set of manpower to perform these tasks is

apparently, an additional capital expenditure. In-house employees may perform such

functions but not as good as getting a third-party firm that specializes on the field and are

sure to be more cost-effective.

Business Process Outsourcing Business Process Outsourcing, more commonly known as BPO started back in 1995 during

the advent of internet business. It involves operational functions such as customer relations

management, equipments, accounting, human resources, logistics, procurement, security,

documentations, insurance, health care, manufacturing, and media outsourcing. In BPO,

specific tasks, especially those outside the core competency of a company, is outsourced to

a third-party firm.

BPO can be further divided into two: front office tasks and back office tasks. Front office

functions are customer-oriented such as marketing, customer service and technical support.

Back office tasks are more on internal work (e.g. billing, payroll, purchasing).

Other operations outsourced by enterprises include multimedia, bookkeeping,

consultancy,data entry, proof-reading and editing, as well as medical transcription. As

internet technologies advance, so is business process outsourcing.

Knowledge Process Outsourcing A more sophisticated level of outsourcing relative to BPO is knowledge process outsourcing

(KPO). This involves advanced research, analytical, and technical skills which means that

providers are expected to work independently. It is also important to note that in BPO, all

processes are still laid out by the client whereas KPO specialists are given managerial

control. Examples of KPO include: pharmaceutical research and development, intellectual

property research, content writing, and database development services.

Among the three types, KPO is the older form of outsourcing and usually involves short-term

and peripheral projects. BPO, however, is considered as the most popular among the three

types especially if one is to consider that most companies outsource business processes to

offshore locations such as the Philippines.

Technology Services Outsourcing

Companies that utilize technology require sophisticated, quick-responding computer systems and software that are flexible enough to respond to the increasing capabilities of technology and the rapid changes in business models. Selecting the right technology partner is an integral part of many successful ventures. Following are the specific types of technology services.

Electronic Commerce ("eCommerce") Infrastructure ("Networks") Software ("Applications") Telecommunications Website Development & Hosting

Business Process Outsourcing

With globalization, enterprises have been challenged to find the niches where they add the greatest economic value to the world's economy. As a result, enterprises have looked for ways to avoid making investments in employees and infrastructures that do not have a high yield. As service providers witnessed this development, they began to create whole enterprises based on narrow business processes. The term "BPO" (Business Process Outsourcing") was coined in about 1995 and became popular a few years later, accelerated by the explosion of Internet business.

Customer Contact (Customer Relations Management) Equipment Finance / Accounting Human Resources Logistics Procurement / Supply Chain Management Security

Human Resources, is becoming another sought after outsourcing area. Other areas of who and what is being outsourced is Document, Utility, Insurance, Secretarial, Consulting, Healthcare, Manufacturing, News and Media outsourcing.

There are four types of outsourcing services: professional, manufacturing, process-specific and operational. Outsourcing services have grown in popularity as more businesses look to reduce their overhead costs while maintaining the same level of output or support. There are risks and benefits to outsourcing that must be considered when looking at different types of outsourcing services. The greatest benefit typically is cost reduction, because the company saves in both equipment and labor costs. The largest risks are related to quality and control.

Professional outsourcing services include accounting, legal, purchasing, information technology support and other specialized services. This is the most common area for outsourcing services, because of the potential cost savings associated with this type of arrangement. The business has access to high quality resources while paying only for services actually provided. This substantially reduces the organization's overhead costs.

O U T S O U R C I N G P R O C E S S

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What is Outsourcing?

Outsourcing may simply be defined as an agreement or contract with a third

party, to provide service to the concerned firm. This third party service provider

may work remotely from a different geographical location or it may work at the

same place. Outsourcing is often referred to as off shoring which is the same as

outsourcing.

The concept of outsourcing came into demand with the advent of many software

companies and with the rise of Information technology. Since the companies

needed a way to handle a huge number of customer service departments, the

concept of outsourcing evolved.

Types of Outsourcing Processes 

There are different types of outsourcing depending upon the need of the firms.

Some of them are – Business Proces Outsourcing (BPO), Account Process

Outsourcing, Recruitment Process Outsourcing (RPO), Knowledge Process

Outsourcing (KPO) etc. These different types of outsourcing basically helps in

providing services to the customers by handling tasks like maintenance, payroll,

research management etc.

Different methods of Outsourcing Processes

Companies have adopted different method of outsourcing to meet the demands

of the customers. Usually the companies hire skilled workers at a low costs and

divide the whole work into different segments, so that they can work with ease.

One important method of outsourcing which the companies have adopted is call

centers. At call centers a number of skilled people are employed to answer the

query of their customers. The employed people are paid salaries which are less

compared to what the firm would have to pay for in their own countries.

Benefits of Outsourcing Processes

There are a number of advantages of Outsourcing; some of them are listed

below:

1. The greatest benefit is that outsourcing helps the organization to gain a lot of

profit, since the operating cost is reduced.

2. The service provided is not of low quality, as the service is being provided by

experienced third party service providers.

3. Outsourcing also helps the organization to work at a number of projects at

the same time. The firm does not have to concentrate on one particular project

at a time, since outsourcing helps in reducing some of the burden from the

company.

4. It is not only the firm who profits from outsourcing. Even the third party

service providers gain a lot of profit. Usually these service providers are from

countries like India, China, and Malaysia etc and with outsourcing the need of

job in these countries are fulfilled and the salary and incentives are satisfactory.

5. Another important benefit is that outsourcing provides flexibility to the

company. It means that the company can easily adapt to any situation or

demands of the market and the customers.

Outsourcing simply means contracting out work, either essential or non-essential, to a third party who is specialized in that particular task, located either in the same country or overseas. When the service provider is located in a different country the outsourcing process is more specifically termed Off sourcing. Outsourcing or off sourcing is a constantly growing industry estimated at $20 billion currently, and the biggest chunk of this outsourcing pie is received by emerging economies like India, China, Brazil, Philippines and Mexico. So what are the various types of outsourcing processes and how can an enterprise benefit from them?

Outsourcing is of multiple types, like Business Process Outsourcing (BPO), Knowledge Process Outsourcing (KPO), Medical Outsourcing, Accounts Process Outsourcing, Legal Process Outsourcing (LPO) etc. In BPO, which is the most common form of outsourcing or offsourcing, the non-core tasks like payroll maintenance, house keeping, and customer support are handed over to companies with proven expertise in the field. Similarly, a company would want to outsource it's accounting processes to a service provider in India or other country. With more than 1.8 million patents being filed annually, Legal Process Outsourcing or LPO has also emerged as a booming industry. Legal services can be obtained for far lower rates in India than in the US and are of the same high standards. Not just patents, even routine legal services like filing affidavits, are being outsourced to third parties as part of LPO.

Some companies specialize in providing knowledge oriented services relating to research and e-education, making up the blossoming knowledge Process Outsourcing (KPO) sector. Even hospitals haven't lagged behind other sectors and are actively outsourcing medical transcription and billing processes to cheaper destinations like India. In fact, medical transcription is offering a new window of opportunity to many

young persons in the developing world, especially females, to earn a steady income from a moderately skilled job.

So what are the Benefits of Outsourcing?

Outsourcing has many obvious benefits like reduction in overall operating costs of an enterprise. By outsourcing the non-core tasks like housekeeping to a third party, the company can concentrate on its core areas, say, software development. Also fixed costs like employee salaries and benefits can be turned into variable ones as the company no longer needs to provide salaries, maternity leave, travel and dearness allowance to employees who are on the payroll of the overseas service partner, all such essentials are the concerns of the latter. This represents tremendous savings in cost, which is especially useful during financial downturns.

Another benefit of outsourcing is that the same high quality service is provided by the overseas service providers, so there is no question of low quality work for low rates, as assumed by many. Moreover the members of the project team very quickly imbibe the work culture of the US or UK based client company and also possess excellent communication skills to complete the task in the shortest time possible. Outsourcing has also rendered continuous development possible, which means working in a constant cycle without interruption, cutting down on the development time drastically. While the UK based team works during the daytime and sleeps in the night, the India based team, which enjoys day, picks up on the task, thus rendering continuous development possible.

Outsourcing also has certain invisible benefits like obtaining a foot hold in new markets, understanding the psyche of the people before introducing a new product or service in foreign land and also certain obvious financial gains in the form of tax benefits, concessional land and so on. No wonder, outsourcing is here, not just to stay, but grow by leaps and bounds in the foreseeable future.

Types of Outsourcing

When you think of outsourcing you generally think of the companies that outsource their call centers, and customer service to other countries.  But with technology today and companies looking to cut costs across the board, all parts of the business process are now being outsourced.  Below you will find a few of the different types of outsourcing that are becoming more popular.

 1. B.P.O: This is an abbreviation for business process outsourcing. This is also a very common term and most of the people know about it by now. Back office operations are performed by Countries like India, China, and Philippines for the major corporations based in Europe and America. This involves data entry, employee payroll and voice calling, thus termed B.P.O.

2. H.R.O: This term stands for Human Resource Outsourcing. It is being estimated that H.R.O may be the next big industry in the Asian market. H.R.O involves many activities like training employees and freshers, administrating benefits, travel and expenses management, payroll and risk management, compensation consulting, etc. Companies are having HR outsourced so that they can focus on their core competency.

3. R.P.O: the term is an abbreviation for Research process outsourcing. The biotechnology

industries have been outsourcing their R&D work. India is one of the major countries where the research work is outsourced. This is again because of the dollar rupee ratio. India may have an edge over others because of the professionals it has who work at lesser salaries than their western counterparts.

 

Today most of the companies wants cost cutting in their business. Now a days Outsourcing

helps to achieve such goals. Outsourcing is the process of contracting with another company

or person to do a particular function. In top most cases almost organizations outsource their

product or services in some way. Typically, the function being outsourced is considered non-

core to the business, this help them to concentrate on their original business. 

Outsourcing services can be categorized in two categories: BPO Outsourcing & KPO

Outsourcing. The IT/BPO Company, for example, might outsource the services related to the

information technology, business processing outsourcing and knowledge processing

outsourcing. Typical BPO outsourcing services are like as multimedia & animation,

bookkeeping and financial services, business consulting, CAD/CAM, call center, data entry,

DTP, typesetting, Handwriting services, HR services, internet marketing, legal services,

medical billing, proofreading, editing, software & technology, transcription, web design & web

development and writing & Translation. Some of typical KPO services are like as knowledge

processing outsourcing services, intellectual property research, animation & simulation

services, data research & analytics, litigation Services, medical content & services,

pharmaceuticals services, writing/content development services and database development

services.

The outside firms that are providing the outsourcing services are third-party providers, or as

they are more commonly called, service providers. For example ITMatchOnline.com, an

outsourcing portal is a kind of service provider for service buyer, which offers projects related

to BPO Services, KPO Services and Information Technology. ITMatchOnline offers some of

typical popular outsourcing services like as call center, book keeping, drafting, internet

marketing, software development, writing, translation and web development.

Currently, outsourcing takes many forms. Organizations still hire service providers to handle

distinct business processes, such as benefits management. But some organizations outsource

whole operations. The most common forms are information technology outsourcing (ITO),

knowledge processing outsourcing (KPO) and business process outsourcing (BPO). The

challenges of outsourcing become especially acute when the work is being done in a different

country (offshore), since that involves language, cultural and time zone differences.

TRAINING PROCESS OUTSOURCING

Types of Offshore OutSourcing

 

It is broadly classified as:

 

Product Component outsourcing 

 Process Component outsourcing

 Software Acquisition

 

Product Component outsourcing

 

When a single developer is unable to develop the required product either due to lack of resources or inability to do so, the

Organization will outsource the whole or part of the project. This will enable the company to focus on other matters which

may be more essential to the profitability of the business.

Process Component outsourcing

 

Under this type of outsourcing, the external group is contracted to perform all the functions of the client’s process

components.

Software Acquisition

 

The activities are performed in a number of well defined steps. The steps that are followed here in a sequential order are: