Outsourcing is a business practice in which a company hires an external party to perform tasks, handle operations or provide services that are either usually executed or could be done in-house. This is often done to cut costs, improve efficiency, or tap into the external party’s specialized expertise.
Businesses can outsource a variety of functions, including information technology (IT) services, customer support, human resources (HR) tasks, manufacturing, and even design and marketing tasks.
There are different types of outsourcing, including:
1. Domestic Outsourcing: This is when a company outsources services to another company within the same country.
2. Offshore Outsourcing: This is when a company outsources services to a third-party organization located in another country, typically where labor costs are lower.
3. Nearshore Outsourcing: This is when a company outsources services to companies located in neighboring countries to benefit from similar time zones, cultures, or languages.
4. Business Process Outsourcing (BPO): This involves contracting regular, non-primary business functions and activities such as HR, finance, or administration.
5. Knowledge Process Outsourcing (KPO): This form of outsourcing involves more complex, knowledge-related work like research, analysis, or consulting.
6. Information Technology Outsourcing (ITO): This involves outsourcing IT services, such as computer programming, data center operations, or cloud services.
The decision to outsource can offer businesses cost savings and flexibility, but it can also present risks such as reduced control over key functions, potential quality issues, and dependency on the outsourced provider.
REFERENCES
Outsourcing: https://en.m.wikipedia.org/wiki/Outsourcing
Top 10: Global Outsourcing Hotspots: https://supplychaindigital.com/top10/top-10-global-outsourcing-hotspots
Wiki Hyphen Website | Updates 4th Jun 2023 | Link: https://www-wiki.com/Outsourcing