Outsourcing; What, Why, and How


‘Outsourcing’ has begun to rise. Unfortunately, the word ‘Outsourcing’ has become attached with a negative connotation As businesses continue to set up and search for ways of expansion and flourishment, without much understanding. People usually associate it with job opportunities going out of their country, such jobs which, had the option to outsource not been present, would have been given to locals instead. Although this cannot be completely denied, there are much more technicalities and practicalities in the field of Outsourcing, which need to be considered.


As per its definition, Outsourcing refers to having a series of tasks or a job assigned and completed by individuals or an organization located elsewhere than the firm itself. This means, instead of having an in-house department designated to the completion of those tasks or project, somebody from the ‘outside’ is hired to do so. This outside entity could belong to the same country or be across borders. It could consist of one individual or an entire team of professionals. The decision remains dependent upon the nature of work and budget of the outsourcing organization. 

Why Outsource? 

To understand the meaning of outsourcing and know that it doesn’t always correspond to the negative connotation it is assigned, it is necessary to know why firms outsource.


Reduce Costs 

  • Transferring some departments to other countries (i.e. outsourcing them) can mean saving up on expensive rental rates, and other overhead costs. The other country may generally be cheaper, especially in terms of exchange rate, as well as have governmental policies with comparatively lesser registration and tax fee. Thus, outsourcing some tasks/projects can prove a cheaper and better alternative to resuming operations in-house.


Rapid Development

  • Outsourcing saves up on time. Let us take the example of software outsourcing. Had the entire project been in-house, there would be a need of proper server, Information Technology (IT) professionals, latest technology, as well as some office space designated for the purpose. All of this needs time for set up, and in the case of technology which continues to advance rapidly, an idea needs to be worked on immediately before it is too late, and another company has already launched and patented it. In such circumstances, outsourcing to an IT company in India may result in immediate work on the idea and project with no time lost.


Access to Specialized Skills 

  • There are many such situations where outsourcing becomes a need, due to the lack of required skills in the area. A company located in the outskirts of a city may not for example, find competent graphic designers located nearby for the work. Thus, outsourcing it becomes a need rather than the desire to simply reduce costs. This also points to the notion that outsourcing does NOT always take away jobs of locals.

Better Business Focus 

  • Outsourcing gives way to greater focus on the core departments of the business, while those unrelated to the main stream of work are designated to individuals and organizations on the outside.

How to Outsource?

Outsourcing has become a common practice in the business world, with it being given the specific name of Business Process Outsourcing (BPO). However, the method of outsourcing remains similar whether a business is outsourcing their work, or it is an individual outsourcing their personal project in the hopes of getting help. 

  • Decide the budget.
  • Weigh the pros and cons of Working in-house vs Outsourcing.
  • If the pros outweigh the cons, search for a suitable vendor.
  • Give them the required guidelines and set the terms of the project.
  • Begin your outsourcing.

 

As outsourcing enters as a quicker, less-costly, yet more profitable way of conducting business, more and more organizations are considering to outsource.