Outsourcing Explained

Someone recently told me that he noticed that outsourcing has received a lot of media attention lately. Well, a lot of company owners and managers have actually told me that outsourcing saved their companies; while others have told me that the word “outsource” is another meaning for “management job-killing scheme!”

Large companies that have already began to assess whether or not, outsourcing is the right strategy to employ would need to clearly understand what outsourcing is, and what it is not.

What is Outsourcing?
Outsourcing can be defined as any job, task, process, or operation that could be carried out by your company staff; but is instead, these company activities are contracted to a third party for a considerable amount of time. Employing a “temp” while your assistant is on medical leave is not outsourcing. Furthermore, the work functions that are carried out by the third party can be done off-site or on-site.

In the news today, I have also noticed that the most popular form of outsourcing refers to work that are being contracted abroad to countries such as the Philippines, India or China – this is commonly referred to as “offshoring”.

The examples of jobs that being sent off shore are tech-support, telephone call centers and computer programming. Well known examples of jobs that are not going abroad are security services, after hours answering services and janitorial services.

Why Outsource?
There are a lot of reasons why an organization may decide to outsource a specific function of its business operations. A large percentage of company management simply believe that they will save time and or money if they outsource. Other reasons to outsource include:

• One well known reason to outsource involves a scarcity of important resources. Large companies can get quality labor force at a level and expense that will offset the high cost of other options.

• Companies that have outsourced essential, but peripheral work functions will have the chance to focus on their core business activities. Instead of getting distracted by necessary, but minor company matters, managers of large companies can focus on the core business functions that are important to the continuous growth of the company

• We all know that the cost of labor and certain work equipments and technologies will continue to rise and the pesky competitors will keep forcing the prices to go even lower. You can save your company some money by outsourcing work functions that will not require your company to keep investing in the latest technologies every year and hiring workers that will not insist on getting “all the work benefits”.

Though many work functions can be outsourced, the following are the commonly outsourced areas:
• Human Resources
• Information Technology (IT) functions
• Telephone Marketing (Telemarketing)
• Accounting
• Telecommunications and Network

Daven Michaels is an award-winning outsourcer and author of the book, ‘Outsource This!’ Daven has been honored more than any other individual or outsourcing organization. You can get more information on outsourcing by visiting www.123Employee.com