What Is Outsourcing?
Outsourcing is a business strategy in which companies hire outside suppliers to provide specific goods or services, instead of producing the goods or services in-house. The term outsourcing comes from the combination of “outside” and “resourcing.”
Types of outsourcing
- Administrative outsourcing is a form of Business Process Outsourcing when certain administrative processes are transferred to an external service provider.
- Recruitment process outsourcing (RPO) is the transfer of recruitment activities to the provider in full or partly (in certain areas, categories of positions, stages of selection process). Many companies hire third-party organizations to find new talent. Recruiters work on identifying, attracting, screening, shortlisting, and interviewing suitable candidates.
- Outsourcing HR Functions is the transfer of the administration and operating management of human resources function, calculation and payment of salaries, as well as the management of the client’s infrastructure.
- Industrial Outsourcing is target based performing of specific tasks or functions to provide services on demand and integration of these solutions into the client’s operational processes.
- Pharmaceutical promotion outsourcing service helps to bring and promote customer’s products onto the market. This service can include a full scope of work. For example, it may be the work of product consultants or medical professionals, when our specialists consult customers at points of sale under agreed program, thereby contributing to increased brand or sales awareness.
What Are the Potential Benefits of Outsourcing?
Outsourcing can help avoid the time-consuming process of hiring and training new staff, while allowing the businesses to grow.
- Cost savings: Outsourcing can sometimes lower costs. For example, a company may want to reduce their labor costs by hiring freelancers, who do not receive benefits or require office space and therefore may be cheaper than full-time employees. Companies can also reduce labor costs by outsourcing operations to a location with a lower minimum wage.
- Focus on core competencies: Outsourcing makes it possible for companies to temporarily expand when demand is high, while allowing their teams to focus on the aspects that made the business successful in the first place. This is especially true of startups, which often operate on a smaller scale.
- Staffing flexibility: It can be more cost-effective for some companies to hire short-term outside contractors when demand is high than to hire new employees that they may not be able to afford during times of less demand. For example, e-commerce retailers may outsource customer service during the winter holidays.
- Specialization: While most companies appreciate staff members who are skilled in multiple areas, it sometimes makes more sense to bring in a specialist than to train employees. A contractor may have expertise and experience that existing staff lack, and will be able to execute a specific task quickly, without delaying regular operational tasks.
- Logistical ease: Outsourcing services such as customer support and shipping sometimes makes more sense from a logistical perspective. These intermediaries may be available outside of normal business hours, allowing companies to provide essential services when their local, full-time employees are not available.
