Outsourcing Defined: What It Means To Business

Services and industries are adapting to the development brought about by outsourcing. 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.In other words, outsourcing is the reassignment of a specific business process or service to a third party company . A lot of medium to large scale companies are engaging in outsourcing these days and the numbers continue to rise as years go by. An example of jobs being outsourced are call centers who run services such as technical support, credit cards, medical transcription, and even bill payments. A variety of companies offer different services but some offer similar services but are geared for different types of clients. Developing countries usually are the nesting ground for outsourced jobs and services.

Only recently has outsourcing been used for a lot of specialized services but outsourcing itself has been around for a long while. Payroll, billing, and data entry are outsourced mainly because companies want to have them specialized for more efficiency. The advantage of specializing a certain process is that it makes it more efficient and more lucrative. Lower operational costs and specialized services are some of the main reasons why foreign companies resort to outsourcing.

There could be a lot of reasons why companies choose to outsource most of their positions. But the primary reasons why companies outsource jobs is because it saves a lot of time and money, which is a very huge advantage for a lot of companies. Many of the companies prefer to outsource services to developing nations where salaries and benefits are not as high as in the original location. Philippine outsourced wages are not even close the minimum wages that are paid to United States workers. Benefits such as health care, bonuses, wages costs much lower if you outsource at developing countries than availing them at the business' original location.

Information technology outsourcing and business process outsourcing are perhaps the two most popular types out of the several forms of outsourcing. Outsourced information technology services often means the transfer of computer and internet related labor. This form of outsourcing creates jobs for programmers, web site developers, and other technology related professions. On the other hand, business process outsourcing involves call center outsourcing, human resources outsourcing, investment and accounting outsourcing, and claims processing outsourcing. IBM and Accenture is involved in business process outsourcing and they are just a few of the big named companies who are into this type of business.

Just like everything else, outsourcing also has its disadvantages. Detachment between the company and the client relationship is one of the main disadvantages of outsourcing. Services like customer care is one of the highest priority in outsourced services nowadays. One of the disadvantages of outsourcing is the loss of opportunities in the mother land because most of the jobs are being outsourced to developing nations.