Outsourcing is the cooperation between two organizations that specialize in one related or complementary field of activity and strive for mutual benefit. When, for example, a US company transfers its authority to serve clients to a company in India, given the availability of cheaper labor, the US company benefits from cost savings, and the Indian company attracts customers, thus generating profit. Outsourcing can help meet the demand for labor and services for an interested business. Despite disruptions and force majeure situations, this can be a strategic way to ensure business continuity, since resources are not just located in one place, but create favorable conditions for conducting business and increasing its capacity.
Today we realize that the main goal of outsourcing is to reduce costs. However, there are other reasons why companies choose outsourcing. One of them is time-saving. For example, quite often companies are assigned to perform labor-intensive operational tasks to focus on more important duties, such as preparing business strategies, expansion plans, acquisitions, etc. In addition to this, outsourcing is often used to seek external expertise, which is not enough within the organization. That is, when everyone occupies their niche, the work becomes effective.
Therefore, many well-known companies follow this motto: “Master your strengths, outsource your weaknesses.” For example, at one time Google hired experts from 60 countries for 1000 Adwords support services, and Slack outsourced several designers to create a logo, taking into account marketing aspects and development of web and mobile applications. However, if the level of skills required for the outsourced job is the same, does it even matter where these skills are based?
Outsourcing can be carried out in different forms, depending on the needs of the business. In addition to knowing and understanding what outsourcing is and how it works, you also need to have an understanding of the different types of outsourcing.
|Business process outsourcing||traditional original outsourcing|
|Professional outsourcing||advisers, consultants, and agencies|
|IT outsourcing||general outsourcing specialization|
|Multisourcing||often found in sectors of the economy characterized by a large number of technological processes|
|Manufacturing outsourcing “Made in China”|
|Outsourcing for specific processes||outsourcing of one specific business function|
|Project outsourcing||outsourcing usually involves large or complex projects|
|Offshoring||emphasis on offshore location|
|Onshoring||outsourcing within the country|
|Nearshoring||outsourcing to neighboring countries|
It should be emphasized that outsourcing is no longer exclusively limited to companies or organizations. Today, anyone can hire a company to perform specific tasks to increase the effectiveness and efficiency of their activities. Consequently, the most interesting in domestic realities are the last three types of outsourcing: offshoring, onshoring, and nearshoring. We will talk about them further.
Despite the entrepreneurial talent of most businessmen, they cannot necessarily complete all tasks. And the practical implementation of all duties on your own can stop the growth of a business. When handing over day-to-day back-office responsibilities, the business owner can focus on generating income. One of the benefits of outsourcing is that it allows an organization to achieve business objectives while simultaneously increasing brand value and a comprehensive resource base.
Given that outsourcing works in favor of a business, it is necessary to decide which model is best suited for a particular need and its advantages and disadvantages.
Thus, offshoring is known as the most budget-friendly approach to outsourcing. Companies outsource suppliers in distant countries like India, China, or the Philippines, where the talent pool is full and costs are low. The difference in time zones plays a significant role here from the point of view of ensuring around-the-clock business.
Nearshoring is outsourcing to a country that is relatively close to the main country of business. In the context of Western European organizations, the