What is Outsourcing? How Exactly Does it Work?

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What is Outsourcing? How Exactly Does it Work?

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Most times, when an organisation needs employees, it results in some form of a dilemma on how this can be accomplished. Options like outsourcing arise. This could lead to the question “what is outsourcing?”

In this post, we will be breaking down the meaning of outsourcing, types of outsourcing services and why you might need them, and, the benefits of outsourcing.

 

What is outsourcing?

Outsourcing is a process where a company passes over the responsibility of planning an activity or project that is or could be done internally to another company.

Outsourcing is a practice many companies deploy to get top candidates without getting involved in the process of sourcing and selecting.

Many companies all over the world are adopting employee outsourcing in order to achieve greater organisational effectiveness, flexibility, improved efficiency, reduced overheads, and a focused/strategic HR management function.

The outsourcing company finds, selects, and trains candidates based on the client’s specifications to meet their workforce needs. Individuals and organisations opt for outsourcing to ease the burden and transfer the risk associated with carrying out certain functions and focus on their core competencies.

 

 

Outsourcing services and why you might need them

As a business owner, you are likely to achieve your strategic goals when you focus on your area of competency.

Outsourcing eliminates inefficiency and associated expenses that arise from handling non-core functions. It is an effective way to improve organizational productivity and gain a competitive advantage in the marketplace.

The different types of outsourcing services include:

  • People Outsourcing
  • Project Outsourcing
  • Process Outsourcing

People Outsourcing

In this case, a company contracts certain business functions over an extended period of time to non-permanent staff to give support to the business growth aspirations, and allow them to focus on their core competencies.

Project Outsourcing

Considering how costly and unrealistic it is for businesses to stockpile skillsets that are only used occasionally, companies look to project outsourcing. This helps them maximize time and profit, and minimize costs.

Project outsourcing is an effective way to execute one-off tasks.

Process Outsourcing

This type of outsourcing service was formerly adopted mostly by manufacturing companies. But these days, it has turned into a concept embraced across several industries.

As the business world becomes more competitive, it has become imperative that organisations outsource some of their processes if they must increase focus and efficiency.
Some process outsourcing solutions include:

  • HR systems management
  • Payroll
  • Performance management
  • Customer care services
  • Call center
  • Marketing and marketing research support
  • Data entry and correction
  • Information center

Outsourcing benefits

  1. Faster services: outsourcing helps you get your ideas converted into products better and faster. It cuts down on the time wasted in onboarding new employees.
  2. Access to skilled resources: by hiring an outsourcing firm, you gain access to a pool of highly skilled resources. As a result, you no longer need to invest in recruiting and training expensive resources for your business.
  3. Cost saving on infrastructure and technology: outsourcing your projects helps you eliminate investment in infrastructure since the outsourcing partner takes the responsibility of the business processes.
  4. Focus on core areas: when you outsource, you are able to focus on building your brand, investing in core areas of your business.
  5. Increased efficiency: A lot of outsourcing companies like this possess expertise from years of being in the business. Therefore, they do the job better with their vast knowledge and understanding of the territory.

In conclusion, outsourcing has proven to be a major ‘life-saver’ for companies who intend to hire employees just to execute particular projects or those who just don’t want to go through the rigorous employment processes for full-time staff.

Now you have an answer to your question: ‘what is outsourcing’.

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