Outsourcing – What is it and What is it for?

Outsourcing is a process in which the fulfillment of certain tasks or projects is transferred to a third-party company, for example, if it is necessary to implement those tasks that are not profile for the organization, but necessary for the further normal functioning of the business. This allows to significantly optimize the internal forces of the company to work on the main subject of activity, while non-core functions are transferred by external specialized agencies.

Types of outsourcing

Total conditionally, you can distinguish 2 types of outsourcing – production and for business processes.

In the first case, it is planned to transfer a part or a full cycle of production to a third-party organization, even the sale of a part of its own subdivisions to other companies may be considered, and further work with them may be carried out under outsourcing contracts.

Image Source: Google Image

Production outsourcing is advantageous in that it allows the main forces of the company to focus on the development of new products or services, which is very important with rapid changes in technology and consumer demand. We should not lose sight of the fact that small-sized enterprises are easier to “reshape” for the release of new products, and outsourcing allows the use of cheap labor.

The second type of outsourcing involves the transfer of a third-party company of individual projects, which are not the main field of the company’s activities. For example, outsourcing is used for personnel management, accounting, marketing, advertising, logistics.

You may also like to read: Time Management and Productivity: 6 Tips For Freelance and Free Professionals

Advantages and Disadvantages

The most understandable and inherent advantages of outsourcing are the opportunities to develop the main direction of the company’s activities, without being distracted, for example, by accounting.

In addition, thanks to this service, you can not engage in the involvement, training and subsequent retention of personnel, and regardless of the circumstances, the production process will be continuous (the third-party company itself is engaged in the replacement of employees for the period of illness, holidays, training is also paid by it).

Image Source: Google Image

If necessary, production volumes can be easily reduced, outsourcing avoids additional investment in software or equipment.

Nevertheless, the main benefit of this service is the opportunity to use for their own purposes other people’s experience, which was accumulated in solving other similar tasks, as well as new technologies. Those companies that specialize in certain services are the first to learn how to solve all the problems that arise and to develop appropriate technologies, since this is what can distinguish them from many competitors.

The disadvantages of outsourcing is the fact that many companies are afraid of losing control over the situation, and even less willing to disclose their trade secrets. Of course, such fears are not without foundation, therefore, as a solution to this problem, we can offer only a more careful choice of the service provider, based not only on the price list, but also on the reputation.

Leave a Reply

Your email address will not be published. Required fields are marked *