Another name for outsourcing is Business Process Outsourcing. BPO refers to the process of hiring the services of another company/ individual, either internationally or domestically to manage a few business functions for you. In the recent past, outsourcing has evolved into being a common practice that enables small, medium and large businesses to get access to skills and services that they would otherwise find hard to achieve either because of manpower or financial restrictions. Outsourcing can help your business grow as and when required, without you having to make any major investment.
Low cost is the biggest advantage of outsourcing
Offshoring allows your business to shift your focus back onto your core business tasks, while helping you cut down on costs and improve your efficiency at the same time. Over the last two decades, companies, both big and small have realized that there are many advantages of outsourcing various kinds of work, but the biggest and most prominent benefit is that you can save money. Individuals and companies that offer outsourcing services out of India, China or The Philippines are able to do the same work for less, as they have few overhead expenses to worry about and also don’t have to provide benefits to their employees.
Is your business looking for skills or expertise that doesn’t exist within your organization? If yes, then the answer to your problems is outsourcing. The meaning of outsourcing is simple – going OUT to discover the SOURCE of what you need. Most businesses nowadays outsource in order to address the needs of their customers, both external and internal. While external customers ultimately buy a company’s services or products, internal customers are a firm’s own shareholders and employees. With the concept of outsourcing a company can obtain payroll services as well as the production of machine parts.
How did outsourcing begin?
Outsourcing can trace its roots back to large manufacturing organizations which engaged outside companies to develop the special components that they required for their products. For instance, in the past, automakers hired external companies to develop components for their air conditioning units, sunroofs and sound systems. In some special cases, automakers even moved entire factories to foreign locations, where they could access special skill sets at a lower cost.
However, in recent years, there has been a big shift towards Service Outsourcing, which refers to the practice of companies engaging outside business firms to help them with specialized work.