ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Functions of Business Outsourcing

Updated on January 8, 2014

Why Outsource?

You have probably heard of, or perhaps you are even evaluating outsourcing firms to provide you with the required service. But, is outsourcing really beneficial to your business? In this article, we will discuss how your business can achieve competitive advantages through proper outsourcing.

What is Outsourcing?

Outsourcing can be defined as "the assignment of specific work to a third party for a specific length of time at an agreed price and service level." and is typically about how well the vendor (someone who provides you with the outsourcing services) can tailor his/her services to meet the client's specific operational requirements. Their ability to work with you is important, after all what you really want is a hassle-free service.

Some of the outsourcing services include:

  • Payroll and employee claims processing
  • Accounting and book-keeping
  • Computer and network maintenance

Companies are reminded fervently to stay lean so as to keep up with the fluctuations in the marketplace and important for businesses to stay focused and align their business development strategy with their core competencies in areas where the business can derive its competitive advantage.

You may ask: if a business focuses on her core expertise, what happens to the ancillary functions such as accounting, payroll, information technology (IT), and credit management that are equally important?

Traditionally, these functions are managed internally for better control. However, with the shortage of labor and the human resistance to change fast becoming a real problem encountered by many businesses today, companies may want to consider outsourcing their non-strategic functions, while directing all scarce resources to the core functions of the businesses.

What are the non-strategic functions to outsource?

We can divide the non-strategic functions of a company into two categories:

Secondary activities

These are tasks that must be performed conscientiously to ensure the smooth running of the business. They include your accounting, payroll and/or data processing functions.

Non-critical tasks

These are tasks of a lower priority, but they must be accomplished still. For instance, your company needs to be cleaned regularly. For such non-critical tasks, outsourcing is most suitable - with minimal risk.


Why should you consider outsourcing in your business?

Optimal utilization of your scarce resources

Management should commit their scarce resources to the highest value-adding areas of the business. For example, if you have limited funds to invest, you should commit your funds to the core areas of your business, rather than investing them in a non-core function.

Effective delegation of manpower

Labor shortage is prevalent in almost every industry these days. Recruiting, training, and retaining of good staff are no easy undertaking. What if you recruit a wrong candidate for the job? What if your staff fails to accomplish the assigned tasks competently? And what if they leave the company without due notice? If you are short of manpower, you should seriously consider engaging professional help to take care of your non-core business functions. You staff can then be freed to handle the core business activities. Usually, these outsourcing vendors can do a better job because they have the infrastructure, experience and skills to provide you with the required support.

Tapping into the expertise of your vendor

Because these vendors are trained specialists with rich industrial experience, they are able to understand your requirements and provide you with innovative ideas to help you improve your existing management functions. These vendors may be better streamlined in terms of business processes or operations. They may have invested in new technologies, or proven methodology to back their outsourcing services. Learn from your vendors - they can be your rich source of information and ideas!

Sharpening your business focus

With outsourcing, you need not have to worry about the execution of non-core operational functions. You can simply divert your attention and resources to grooming your business, reacting quickly to market changes, and making profits. Especially with the advent of technology and keen market competition, we need to constantly remind ourselves to stay focused in our business objectives.

Business Outsourcing - Where should you begin?

Start with your company's goal and objectives. You may first develop a clear understanding of what your company wants to achieve, and thenm translate these objectives into a policy for outsourcing. Your management's support and commitment to outsourcing is equally important. Understand the objectives of outsourcing and think through the processes carefully. If you don't know where you are heading, then don't jump into it!

Conduct a quick review of your current business functions and determine which are the core and non-core activities. From the list of non-core activities, you may then decide which are the ones to outsource. Make sure there are ready vendors whom you can engage to assist you.

Be selective with your choice of vendors. Make sure the chosen vendor is compliant with the quality service standards set by your company. For example, you may expect your vendors to complete all processing by the 10th of every month, etc.

Appoint a coordinator to oversee this "vendor-company" relationship. Always strive to keep the channels of communication open between the company and the vendor to avoid any misunderstanding. You need to keep your staff informed, especially those who will be directly affected by outsourcing. Think of how you can better deploy your staff's services within the company. Retrenchment is NEVER the easier way out.

Here are some practical pointers to help you in your vendor selection:

  • Identify only vendors who share your company's value or philosophy.
  • Remember - the cheapest may not offer you the best service! Instead, try to understand what the vendors can deliver. You may be paying more for their services, but you are getting in return better customer service, quick response time and commitment.
  • Check if the vendor's proposed system and processes complement yours.
  • Access how flexibile the vendor is. Does he insist on doing things his way all the time, or is he willing to listen to your requirements first?
  • Finally, choose only vendors who are capable of helping your company innovate and improve on your current workflow and/or processes.

Comments

    0 of 8192 characters used
    Post Comment

    • profile image

      Navjot Kaur  

      7 years ago

      thanx very usefull

    • profile image

      multimastery 

      8 years ago

      Outsourcing is a judgement call. A business operation should closely evaluate whether it would be more feasible to keep a task in-house -or- outsource it in order to gain more productivity & profit . This hub is gives great detail in order to make an educated decision. Nice work!

    • profile image

      John 

      8 years ago

      Outsourcing has slowly emerged as a very important aspect of modern business. Outsourcing areas of business not only helps promote the best business practices but also gives you wider exposure to the latest technology.

    • profile image

      SpectraMind 

      9 years ago

      In a conversation with A. Soliman – R&D director in spectramindtech.com – he clarify that all Egyptian software development outsourcing companies are ready to be the best, and this required more concentration in the next three years.

      Egypt is already has worldwide classification as sixth country provides outsourcing services, and is famous of call centers outsourcing, and when we asked Soliman about the applied sciences experiences in Egypt, he answered "Egyptian youth are very connected to modern applied sciences, spectramindtech.com as an example, has large experience in theoretical and applied sciences, and we use it in R&D department to problem solving and optimization of integrated solutions in the field of software development".

      Moreover, Soliman thought that Egyptian companies are in the right way to become the future of software development outsourcing, and uncovered that spectramindtech.com directors are studying the idea of constructing Egyptian Software Outsourcing Association to provide more facilities to Egyptian outsourcing companies.

    • profile image

      harry 

      9 years ago

      Very informative, im on my way to look for info's about outsource because im planning to avail a service and i stumble upon this article. very helpful! now i fully understand all about outsourcing. now im on my call my target provider (www.secretstaff.com) with confidence.

    working

    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://hubpages.com/privacy-policy#gdpr

    Show Details
    Necessary
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
    Features
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Marketing
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Statistics
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)