The Wikipedia definition of “Outsourcing” is: “Subcontracting a service, such as product design or manufacturing, to a third – party”. It means that the company will be assigning a specific task to third – party based on the capabilities, skills, or expertise of the provider.

It is so simple, outsourcing means a process wherein the company delegates some of its operations to a third party. Hence, outsourcing is a process of contracting another company while keeping the ownership and core processes of the business. While the provider will do their tasks to improve basic processes for greater and efficiency results.

It is common that the company outsources in the same country. On the other hand, if the company outsources to other countries, the right term for it is offshore outsourcing. With the help of Internet, offshore outsourcing is made possible from anywhere in the world. Perhaps, the best feature of offshore outsourcing is that it has to go on 24/7, to meet the different timezones. In recent times, even the specialized expertise like programming, web design and development are being outsources. Such companies outsource these specialized works with a goal on developing their markets at the same time a way of expanding their business operations to other countries. The common countries that provide outsourcing services are Philippines, India, and China.

When a company contract a provider outside the country, but on the same continent it is called nearshore outsourcing. For example, a US company outsources some of its operations to a provider from Canada, it is nearshore outsourcing.

Whether it is offshore or nearshore outsourcing their main reason why a company outsources outside their organizational structure is to save money as well as to make use of the skilled professional. Saving money means a lot for every business. A company can save money when they outsources than hiring employees to do the tasks.

The services of outsourcing can be categorized in two categories: Business Prcoess Outsourcing and Knowledge Process Outsourcing. The difference between the two categories is BPO focuses on IT – related activities while KPO focuses on knowledge – related and information – related work.

Outsourcing will benefit business in several ways. It is an effective way to manage business core functions without incurring the expense of full time employees. The operational cost will cut down. Outsourcing also is the answer to freeing up more time for a company.

photo from: businessweek

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