As an organization strikes a deal with another company, either on-shore or offshore, and assign to them some of their tasks and functions, then that is called outsourcing. Developing countries like China, India, and the Philippines' economies continue to benefit well from the outsourcing industry. Business process outsourcing, knowledge process outsourcing, and information technology outsourcing are the three major types of outsourcing There are three kinds of outsourcing; the information technology outsourcing, business process outsourcing, and the knowledge process outsourcing.
The Business Process Outsourcing which is often referred to as BPO is a type of outsourcing industry which involves outsourcing a particular task or functions such as customer relations management, book keeping and business consultancy. Knowledge process outsourcing or KPO involves in-depth research and analytical skills that are outsourced to other companies. Programming, website development, and other computer related functionalities are known as Information Technology outsourcing. Business process outsourcing is the most popular and in demand type of outsourcing among the three.
Some of the reasons companies choose to outsource their specific job functions are: cutting down costs - it enables companies to look for countries that have much lower wages and outsource some part of their functions there. Another main reason why companies tend to outsource is because the company itself lacks the resources to get the job done. Since some companies do not have the resources to perform a specific business function they outsource them to other companies who are guaranteed to be able to accomplish those tasks. Increase in flexibility is one additional benefit of outsourcing since they are able to meet the erratic demands of the industry and the clients.
Outsourcing enables a company to save a lot of time and energy in performing specific functions. Outsourcing also helps companies have a tighter grasp and control of its budget because costs become more predictable when they outsource. Companies can focus on core functionalities and since they know the importance of outsourcing their other business activities to companies, thus making sure that they are also achieving high quality standards in accomplishing those tasks.
The major locations for outsourcing are China, India, Philippines, and Malaysia. These countries boost the growth of outsourcing for them because of the lower wages being paid yet the high quality results of the tasks being given to them by multinational companies and corporations.