When a company subcontracts a part of their business function or service to a third party company locally or abroad, that is known as outsourcing. Developing countries like China, India, and the Philippines’ economies continue to benefit well from the outsourcing industry. The outsourcing industry is divided into three major types; the Business Process Outsourcing, Knowledge Process Outsourcing, and Information Technology Outsourcing. Business process outsourcing or BPO often involves assigning a particular business function to third party companies such as customer service and bookkeeping.
Advanced research and technical analysis is also known as knowledge process outsourcing. The Information Technology Outsourcing involves outsourcing business functions such as programming and other computer and internet related tasks. Among these major types of outsourcing, the Business Process Outsourcing is considered to be the most in demand and most popular type.
Outsourcing to other companies have many reason and one of them is: cutting operational costs – they try to find countries with lower wages and outsource their part of business functionality over there. Another main reason why companies tend to outsource is because the company itself lacks the resources to get the job done. Lack of resources is one reason companies outsource their specific functions to other companies as these companies are able to provide the right resources needed to perform the tasks that are needed of them. Outsourcing also helps increase the business’ flexibility that will help them meet the changing needs of the industry and their clients.
It saves a lot of time and energy when company outsources some of its specific functions to other companies. Predictable operational costs enables companies to have more control with their finances. Organizations believe that tasks can be done easily and efficiently if they are outsourced because the company in which the organization has assigned those tasks will focus on accomplishing them with the highest quality, therefore the organization can then focus on the business aspects that need keen attention.
India, China, Philippines, and Malaysia are just some of the major outsourcing locations. 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.