A Brief History: Outsourcing is a service that’s here to stay. In the early part of the industrial era, companies were huge monoliths that owned, managed and directly controlled their assets and processes. Towards the middle of the last century, diversification became the norm, but this required multiple layers of management to oversee the different areas of business, resulting in bloated, top-heavy organizations.
By the late 1980s, outsourcing was beginning to slowly gain popularity and a good image. Though some businesses like publishing had already begun to outsource certain areas of their business like proofreading, editing, typesetting etc., formal outsourcing was yet to take off. The 1990s saw a greater emphasis on cost-savings. Contract labor, farming out of routine work, certain seasonal work like accounting, data entry, human resources etc. were established. By the end of the century, outsourcing customer service functions became the keystone of the outsourcing industry.
Definition: Outsourcing can be described as the transfer/delegation of day-to-day operations, non-revenue producing and/or non-core areas of a business to an external service provider to benefit the company, allowing it to concentrate on core specialization areas.
Commonly Outsourced Areas: Some of the businesses/services that are usually outsourced include:
• Customer Support
• Financial, Taxation and Accounting
• Data Entry
• Document Verification
• HR and Recruitment
• Creative and Design
• Web Design/Programming
• Medical/legal Transcription
• Software Testing/Development
• Research & Analysis
• Legal/Healthcare Services
• Content writing
• Security services
The list is almost never-ending as more jobs fall into this category with the advance of communications and technology.
The Benefits of Outsourcing: The bottom-line in the outsourcing business is that all these jobs are considered to be ones that don’t impact the overall functioning of the parent company. Since organizations typically lose some control when they outsource work, they need to feel reassured that they have indeed made a wise choice. Outsourced jobs are at opposite ends of the skill spectrum – either they require a highly-skilled work-force, or they require very little training/skill. However, the ultimate benefits are tangible, measurable and clearly impact the overall functioning and well-being of the company.
These benefits include:
• Flexibility and adaptability conferred on your business
• Greatly-reduced operational, infrastructure and labor costs
• Highly-improved, streamlined, efficient services
• Frees up the company to focus on core competency areas
• Leveraging of international skills and knowledge
• Saves time, effort and resources which would be wasted on routine tasks
• Helps in business process re-engineering
• Taps into global market resources in times of financial crunch
• Lower wages paid to overseas workers
• Lower regulatory costs
• Tax breaks in international markets
• Peace of mind since routine, but mandatory tasks are completed in time
• Tap into areas of skill which are lacking in your company
The era of the large, elephantine, all-inclusive corporation is long past and outsourcing is the new mantra that creates a leaner, meaner organization!