Outsourcing 101: An introduction to the business strategy

outsourcing 101

Outsourcing has been a buzzword in the international business community since the 1980s, and has become a common practice these days. The  global market for outsourced services stood at $76.9 billion in 2016, and it is estimated that it will reach $220 billion by 2020. From small businesses to huge corporations, business leaders choose to outsource some of their processes because of the workforce productivity, flexibility and cost reductions that can be realized.

Here, we will provide an introductory guide to help you learn the basics of the outsourcing model and assist you in making the solid decision of taking your business to a whole new level.

Outsourcing: An Overview

Outsourcing is a broad term referring to the practice employed by various companies in the modern business landscape, which involves the transfer of labour or processes to a third-party service provider. This can be in the form of:

  • Contracting with outsourcing companies which offer a wide array of services
  • Hiring virtual employees or homebased contractors to have them perform one-off tasks or on a project basis
  • Employing independent contractors to execute certain tasks that are not handled effectively by your current staff

Depending on the location of the service provider, outsourcing operations can be classified into three categories:

  • Offshore Outsourcing– In this type of outsourcing, the third-party service provider is outside the home country or region of the client (e.g., a US company availing the services of a BPO firm based in the Philippines).
  • Nearshore Outsourcing– In this form of outsourcing, the service provider is based in a country near the client’s home country (e.g., a US-based company outsourcing some of its processes to a BPO company in Mexico).
  • Onshore Outsourcing– Under this category, the vendor is in the same country as that of the client (e.g., a startup in Seattle availing the services of a company based in Birmingham, Alabama).


Types of Tasks to Outsource

There is no limit to the kind of tasks that can be outsourced. In fact, it can be virtually any work that you need to get done. The beauty of outsourcing to a virtual employee/s is that the business owner can handle tasks that do not yet demand a full-time or part-time employee. Some of the most commonly outsourced tasks include:

  • Customer Service
  • Marketing
  • Web Development
  • Content Writing
  • Design Work
  • Accounting and bookkeeping
  • Technical Support
  • Lead Generation
  • Human Resources


Primary Benefits of Outsourcing

There must be some reasons why even Fortune 500 corporations outsource their processes. Here are some of the benefits that you can enjoy from taking the outsourcing route:

  • Cost-effective- Business owners typically avail outsourcing services from companies based in countries with lower labor rates. As a result, there will be significant cost reductions.
  • Gain access to additional resources, especially those which are not available internally
  • Higher productivity and faster completion of tasks- Since you will gain access to more resources, work will be completed much faster.
  • More time to focus on core business processes by freeing up yourself and your internal resources from mundane and time-consuming tasks
  • Gain access to highly skilled staff with domain-specific expertise from different parts of the world
  • Greater control of budget as the costs of outsourcing are predictable
  • Business flexibility- Through outsourcing, companies can easily adapt to the varying seasonal demands on their resources.


Final Thoughts

Outsourcing proves to be an important resource for all types of companies—from startups to established corporations. If implemented properly, an outsourcing model will ultimately boost overall productivity, bring cost savings, and drive better results for the business.

Now that you know better, do not miss out and dive into the world of outsourcing! Direct Sourcing Solutions provides outsourcing services that are tailored specifically to your business needs. Why let you and your team get stuck doing the same non-core time-consuming processes, when you can allow us to give you a hand?

Witness outsourcing done beautifully by contacting us today and let’s discuss the best solutions that are suitable for your requirements.

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