The Five Most Common Jobs That Get Outsoruced

outsourcing def

Specifically, the up-in-comers are Costa Rica, Columbia, and Chile. As market trends, the economy, technology, cost of oil, and labor practices continue to change, businesses will continue to tweak their Outsourcing business strategies accordingly, as they have done since the 18th century.

The only type of Outsourcing that really occurred during this period was when companies hired external suppliers for ancillary services. Unaware of the possible benefits of outsourcing, this early Outsourcing only occurred because most organizations were not completely self-sufficient; they outsourced the functions for which they had little to no competency internally. Publishers, for example, would often outsource printing and fulfillment services. Whereas today, Outsourcing print needs is simply a business strategy, as Outsourcing is a way for organizations to reduce costs.

Latest TechTarget resources

Companies use IT outsourcing for functions ranging from infrastructure to software development, maintenance and support. Almost every type of business today has IT needs or at least deals with technology on some level, which makes it so commonly outsourced. A good example of IT outsourcing would be if a company outsources its IT management because it is less expensive to contract a third party to do so than it would be to build its own in-house IT team.

When highly skilled people can outsource lower-value tasks and spend more time at high-value tasks, businesses tend to benefit. Proponents of outsourcing say that it can also increase overall efficiency in the economy by distributing tasks to people who have the appropriate skill level for those tasks and letting highly skilled workers be more productive. Companies generally decide to outsource the production of goods and services if they think it can save them money and, by doing so, increase company profits. The most frequently cited example of this has to do with labor costs.

A recent and rapidly growing Outsourcing trend is the process of nearshoring. Rather than reshore services back to the US, companies have begun to move business functions to a country geographically closer with a closer time zone or economic structure to the company’s home country. Basically, nearshoring combines the benefits of outsourcing offshore and the benefits of reshoring to create a strategy that cuts costs and improves services (only two of the many benefits of outsourcing, as stated). Latin American countries are proving to be dominant players in this type of Outsourcing for US companies.

In the recent past, companies thought sending manufacturing jobs from the US to areas like China and India were low-cost, and a no-brainer Outsourcing move. However, now many of these manufacturers are beginning to realize that offshoring production services to countries like China and India may not be as cost-effective. As companies asked the question – What is outsourcing, more and more, this realization led US-based companies to start bringing their offshore manufacturing capacity and jobs back home. It can be summed up as the reversal of Outsourcing or the transfer of a business operation back to its home country. There are some benefits to reshoring, such as the rising cost of oil, which has impacted shipping costs is not a problem with reshoring.

What are examples of outsourcing?

Some common outsourcing activities include: human resource management, facilities management, supply chain management, accounting, customer support and service, marketing, computer aided design, research, design, content writing, engineering, diagnostic services, and legal documentation.

Companies also have to account for duties, custom charges, long shipping times and time delays with offshoring, which adds stress to cash flow and can even increase the cost of goods for consumers or businesses. Some Companies go even further and do what is called insourcing—the opposite of Outsourcing. This entails bringing previously outsourced processes handled by third-party firms in-house, and is sometimes accomplished via vertical integration. The second riskiest type of activity to outsource is one that affects the relationship between a company and its employees.

Or, an enterprise might outsource all of its data storage needs because it cannot afford to or simply does not want to buy and maintain its own data storage devices. These two examples are common for smaller or medium size organizations. Most large businesses only outsource a portion of any given IT function. They often outsource information technology services, including programming and application development as well as technical support.

Process Outsourcing is also used to describe the practice of handing over control of public sector services such as (fire, police, armed forces, etc.) to for-profit corporations. IT outsourcing, a type of professional Outsourcing, is one of the more common services outsourced today. It refers to the practice of seeking technology related resources or subcontracting outside of an organization for all or part of an informational technology function.

outsourcing def

  • Rather than reshore services back to the US, companies have begun to move business functions to a country geographically closer with a closer time zone or economic structure to the company’s home country.
  • A recent and rapidly growing Outsourcing trend is the process of nearshoring.
  • Basically, nearshoring combines the benefits of outsourcing offshore and the benefits of reshoring to create a strategy that cuts costs and improves services (only two of the many benefits of outsourcing, as stated).

Outsourcing vs. off-shoring

Sticking with the print example, the forms of Outsourcing range from organizations Outsourcing the placement of printers to Outsourcing printing and publishing jobs completely and on a print-on-demand basis. However, Outsourcing as a business strategy only started to emerge during the Industrial Revolution. Sometimes companies outsource because of the opportunity costs of doing or producing a good or service themselves. For example, a CEO of a tech startup might outsource HR because she feels her time would be better spent meeting with venture capitalists and getting her tech team up to speed than with managing employee benefits.

By contrast, support functions such as accounts payable and maintenance are less risky to outsource because they have few direct links to customers or internal organizational processes. Companies worldwide are now outsourcing services and projects to expand their operations and cut labor costs. The global market size of outsourced services reached $85.6 billion in 2018. This practice can streamline your day-to-day tasks and free up your time so you can focus on the core aspects of your business. Apple, IBM and Cisco Systems are just a few of the companies that outsource customer support, production, web development and other services.

Surprisingly, the recession may cause some human resource outsourcing firms to hire American workers. All the benefits listed above come with the bonus benefit of lower cost and big savings! Maintaining an infrastructure can be an extra burden for some businesses, which outsourcing can remove. Other Outsourcing services can be specific to a process or internal procedure, which is commonly referred to as process-specific Outsourcing. Today, it is very common to outsource specific operation-related aspects to other companies or units that specialize in that specific service.

The phenomenon of job outsourcing in the United States provokes great economic contention. On one hand, this prevalent practice lowers costs for U.S. companies, enables global competitiveness, and allows them to provide reasonably-priced goods and services. The benefits also extend to countries on the outsourced end, many of which have grown their economies through U.S. outsourcing.

Outsourcing trends and future directions

For example, a bakery can outsource the delivery of a packaged cake to a courier company like UPS or FedEx. Such an Outsourcing contract would then involve details on delivery timelines, customer contacts and costs, which then allows each company to focus on its strength and improve customer service all while reducing costs and time.

Outsourcing didn’t become popular until the 1990s when cost saving became a big issue for many companies. At that time, resources that were outsourced were required by a company but didn’t necessarily have a big impact on its core business. A big chunk of these were customer service-related jobs that were handled over the phone. In the 19th and early 20th centuries, companies did not use Outsourcing as a business practice like today. There was no IT outsourcing at all, in fact, Outsourcing was not even formally identified as a business strategy until 1989.

Human resources outsourcing reduces costs by pooling thousands of businesses. This lowers the price of health benefit plans, retirement plans, workers’ compensation insurance, and legal expertise. Human resource outsourcing particularly benefits small businesses by offering a wider range of benefits.

What do you mean by outsourcing?

Outsourcing is a business practice in which a company hires another company or an individual to perform tasks, handle operations or provide services that are either usually executed or had previously been done by the company’s own employees. They frequently outsource customer service and call service functions.

They frequently outsource customer service and call service functions. They can outsource other types of work as well, including manufacturing processes, human resources tasks and financial functions such as bookkeeping and payroll. Companies can outsource entire divisions, such as its entire IT department, or just parts of a particular department.

Companies might outsource and/or offshore to a country that has lower labor costs. While some might see the local job loss as a negative effect of outsourcing, the increased profits that can result are hard for companies to resist. Companies may also outsource to save themselves the expense of training and hiring all in-house employees, or to scale their business. Companies pursuing innovation strategies recognize the need to recruit and hire highly qualified individuals, provide them with a long-term focus and minimal control, and appraise their performance for positive long-run impact. When certain support services—such as IT, software development, or materials management—are outsourced, innovation may be impaired.

Leave a Reply

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