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Business Outsourcing

What is outsourcing?

Business outsourcing, or BPO, is a business practice in which one organization hires another company to perform a process task that the hiring organization requires for its own business to operate successfully.

it has its roots in the manufacturing industry, with manufacturers hiring other companies to handle specific processes, such as the parts of their supply chains unrelated to the core competencies required to make their end products

Uses of Outsourcing :

Organizations engage in business outsourcing for two main areas of work: back-office functions and front-office functions.

Back-office functions also referred to as internal business functions including accounting, information technology (IT) services, human resources, quality assurance, and payment processing.

Front-office functions are External business functions which include customer relations services, marketing and sales.

Types of Outsourcing:

Offshore outsourcing, or just offshoring, occurs when an organization contracts for services provided with a company in a foreign country.

Onshore outsourcing, happens when an organization contracts for services provided by a company that operates in the same country.

Nearshore outsourcing ,when an organization contracts for services provided by companies based in neighboring countries.

Scope of Work:

As an organization moves a function to a new outsourced provider, it must identify the scope of the work shifting from in-house staff to the external partner.

Executives should also identify the key objectives for outsourcing a function.

whether it’s cost savings, increased quality, quicker turnaround, or some other objective .

And then use those criteria to determine which provider would be best suited to handle the work.

Those objectives also serve as the basis for contractual obligations that are used to assess the performance of outsourced provider.

How Does it Work:

Organizational executives arrive at the decision to outsource a business process through a variety of avenues.

Management advises enterprise executives to identify functions that can be outsourced and then evaluate that function against the cons

To determine if shifting that task to an outsourced provider makes a profit and strategic sense for the organization.

Advantages of Outsourcing:

Financial benefits: Organizations often find that an outsourced provider can perform a business process at lower costs

Expanded coverage: Outsourced providers can expand the hours or geographical reach of an enterprise in a cost-effective manner.

Flexibility: BPO contracts can allow organizations greater flexibility to adjust how it completes the outsourced business process.

Higher quality and better performance: employes can perform for what they’re hired.

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