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What is outsourcing?

by emily joyce

Outsourcing is well-known as “Business process outsourcing”. This is an amazing method of hiring another company. Sometimes hiring individual globally. They manage all your business activities in an effective way.

Outsourcing has become one of the common business practice that allows every business to gain everything right from the skills to services that usually feel hard to build and manage. Sometimes it may happen because of insufficient resources, financial crises or manpower constraints.

This is basically preferred when the labour cost is expensive. That is hiring a software employee or graphical designer. Small and medium scale business cannot offer huge salaries. Therefore outsourcing is greatly used for any position (customer care executive, tester, developer, analyst, etc).

With an immense growth in technology and the rise of startup companies, outsourcing is becoming a window for enormous opportunity for many companies. This practice was introduced in the 1970s and grew popular in 1990 as an effective path for many businesses to conquer their internal expense structure.

A few decades ago, cost reduction is the core reason to choose a business to outsource. But right now, there are various critical concerns that every company thoroughly consider while selecting ‘outsourcing partner’.

Why does business outsource?

In its modest way, many businesses outsource because it diminishes their expenses to manufacture a product, thus growing their profit margins.

Following are the top Reasons for outsourcing:

Reduce and control expenditures

Reduces the cost of labour power. This is the primary reason why business select to outsource. When the approach is perfectly executed, this method will have a great impact on business revenue. Also, deliver high significant savings.

Improve business

Basically, many businesses prefer to outsource because they can continuously focus on their key business process.

Access to new market areas

It enables a business to tap into and also leverage an international knowledge base. Gaining access to world-class responsibilities and capabilities.

Saves internal resources

Free up the internal resources. This allows an effective benefit for other primary benefits. There are times of insufficient resources, most business offshore to gain control to resources (machinery, laptops, etc) unavailable internally.

Saves products cost and therefore provide a ‘buffer capital fund’ to business.

Expedite project by maximizing external sources

By delegating services to external agency business can wash out their hands off on difficult functions. Companies hand over the complicated task to an outsourcing agency.

Develop customer or client focus

It enables a business to realize the fact and benefits of ‘re-engineering’ and ‘upgrade’. The revise can be done according to the client’s specification and requirements.

Few businesses offshore to help them expand and gain access to a new market. By concentrating on service, delivery and production to their end-users.

Promote efficiency

Outsourcing is a great choice when the procedures of your backend are complicated. The environmental size and space of your business prevent you from fulfilling them at low cost. It’s a known fact that the budget for performing a backend function is higher. While considering outsourcing those backend functions can be moved easily without any risk.


The term flexibility is one of the core factors in outsourcing. Scalable outsourcing is an effective growing preference for many businesses. This technique works on growth as well as downsizing. There are many business clients who choose ‘outsourcing service’ that is highly flexible, adjusting to the client demands of the business.

The flexibility enables companies to respond to the changing requirement and specifications.

  • Adjust to business targets
  • Easily adapt to modification in both internal and advancements
  • A smooth shift of focus – adjustment and recommendations

On the other hand, it could be a little challenging for ‘outsourcing services’ to be fully adaptable with the business changing the world.

The evolution of outsourcing has led to different types of ‘outsourcing services’ today. It is important to have a brief knowledge of a variety of outsourcing services.

Following are different types of outsourcing

Professional outsourcing

If you’re running a business, you might come across various functions such as accounting, IT, HR support, legal and other professional services. These are commonly referred to as outsourcing. As they provide high-cost savings. You can only pay for services provided while accessing the resource from outsourcing. Ultimately it reduces overhead costs.

IT outsourcing

IT outsourcing is a great approach for many companies ranging from software development to support. Because almost every business definitely requires IT support. If you outsource IT management, then the expenses spend on the third party would be cheaper than an in-house team.

IT outsourcing can involve in two ways such as

  • External domestic ‘IT outsourcing’
  • External international ‘IT outsourcing’


The multisourcing is imperative and provision of IT outsourcing expansion. It is well-known as ‘outcome-focused’, perfectly integrated and functions in a partner relationship manner. This gives great visibility and no conflicts will be raised during the business functions. This type of outsourcing can be applied to multiple areas. In which it is commonly used in IT services.

Process-specific outsourcing

There are other ‘outsourcing services’ that are preferred by specific functions or internal procedure of business. In the current world, it is pretty common to outsource internal operations to specialised service. For example, cake delivery can outsource through specialized companies such as FedEx, UPS, etc.

Process-specific outsourcing can involve various details such as delivery times, customer contacts, cost, etc.  

Project outsourcing

Managing every project in the business can be complicated. Sometimes there may be a delay in executing the project or insufficient resources. In such situations ‘project outsourcing’ will be helpful. If you want to outsource the entire project or a specific part of the project, these services can be contracted at a low cost.

Final thoughts

If you want to grow your business within a short period, then “outsourcing” is the right choice for you. Moreover, you don’t require a major investment. Many companies rely on outsourcing to grow their business productively. There are various outsourcing companies around the globe. However, customer care services are located at a different location, these call-centre executive are not getting paid a huge amount, but the team are providing valuable services to their customers. Labour costs and maintenance are two major factors to outsource. 

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