ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel
  • »
  • Business and Employment»
  • Business & Society

How To Define Outsourcing

Updated on August 22, 2010

How To Define Outsourcing

Outsourcing is a development that is becoming more common to specific types of services and industries. Outsourcing can be defined as subcontracting a service to a third party company to provide a service that could otherwise be performed by in-house workers.In other words, outsourcing is the reassignment of a specific business process or service to a third party company . Outsourcing is continuously rising as the years go by and many large and medium scale companies are getting involved in this type of business. Call centers that service credit cards, payment of bills, technical support, and medical transcription services are just few of the many examples of outsourced jobs. These third party companies either handle different jobs or they do offer the same service but cater to a wide range of clients. Developing countries usually are the nesting ground for outsourced jobs and services.

Outsourcing has been around for quite a while but it was only in recent years that bulks of specialized services have been outsourced overseas. Services like payroll, billing, and data entry are being outsourced by companies due to the fact that it can be more efficient when done so. The advantage of specializing a certain process is that it makes it more efficient and more lucrative. Lower operational costs and specialized services are some of the main reasons why foreign companies resort to outsourcing.

There could be a lot of reasons why companies choose to outsource most of their positions. But the primary reasons why companies outsource jobs is because it saves a lot of time and money, which is a very huge advantage for a lot of companies. One of the reasons why companies want to outsource to developing countries is because the payroll and the benefits are not as expensive compared to the mother location. Minimum wages of outsourced jobs like that in the Philippines is nowhere near the minimum wage to that of employees in the United States. Benefits such as health care, bonuses, wages costs much lower if you outsource at developing countries than availing them at the business' original location.

There are many types of outsourcing today but two of the most well-known forms are information technology outsourcing and business process outsourcing. Relocation of computer work and internet based technology is often the case confronting outsourced information technology services. Programming, website development, and. Call center outsourcing, human resource outsourcing, investment and accounting outsourcing, and claims processing outsourcing are just the other types of business process outsourcing. IBM and Accenture are just some of the biggest companies that are involved in business process outsourcing.

Just like everything else, outsourcing also has its disadvantages. One of the disadvantages is the severance of direct ties between the company and their client. Customer care for products used to be provided directly by employees of the company but these days this is one of the first services that are outsourced. Another drawback of outsourcing is the loss of jobs in the developed nations because jobs and opportunities are disappearing abroad.


    0 of 8192 characters used
    Post Comment

    • profile image

      Jessica 7 years ago

      this is good, it helped me with my revision for my a-level in ICT :)