Definition Of Outsourcing

Outsourcing is becoming a common development among specific industries and services. Outsourcing simply means that a company chooses to let a third party company to run a certain process in their business that can also be done by their in-house employees. Simply put, outsourcing refers to a transfer of a business function or a service to an external, third party service provider. Many large scale and medium scale businesses are getting more and more involved in outsourcing as the years go by. Call centers that service credit cards, payment of bills, technical support, and medical transcription services are just few of the many examples of outsourced jobs. Different companies handle the different jobs or some companies have similar jobs but cater to different clients. Most of these jobs are situated overseas or off shore and are usually located in developing countries.

Specialized servicces have just recently been included in outsourcing but unknown to many, outsourcing has been around for quite some time now. Payroll, billing, and data entry are outsourced mainly because companies want to have them specialized for more efficiency. Being efficient and cost effective are the advantages of specializing a specific service process. Specializing in a service and lower overhead costs are just two of the reasons that companies choose to outsource.

Companies have a lot of reasons to outsource their services to other countries but one main reason why they do that is because they save a lot of time and money which is perhaps the most imprtant aspect of it all. Developing countries have such a less expensive salary and benefits that foreign companies would want to outsource their jobs to them. The minimum wage of an employee in the Philippines is nowhere near the minimum wage that an employee in the United States has to be paid. The benefits not only entail lower wages but also when you outsource to developing nations things like health care, bonuses, and other things like that cost even less than from the origin of business.

Information technology outsourcing and business process outsourcing are perhaps the two most popular types out of the several forms of outsourcing. Relocation of computer work and internet based technology is often the case confronting outsourced information technology services. This form of outsourcing creates jobs for programmers, web site developers, and other technology related professions. Other types of business process outsourcing are call centers, human resources, investment and accounting processes, and even claims processing. Some of the biggest and most popular companies that are involved in business process outsourcing are IBM and Accenture.

Outsourcing also has its disadvantages like many other business models. Perhaps the drawback of outsourcing is that the relationship between the company and the client is cut off. These days services like customer care for businesses' products and services are the most sought after outsourcing jobs. Loss of job opportunities in developed nations is one big drawback of outsourcing jobs in developing nations.