What is outsourcing in simple words

Posted by Joseph Spolb on July 20th, 2019

Outsourcing Companies and Firms

A company that specializes in some business processes accepts projects from another company. Such processes are not one-time, as a rule, a contract is signed between enterprises for a period of not less than a year.

If you hear somewhere about an outsourcing company, it means that it provides people, as if on lease, to do this or that job or service.

Work may be completely different. Starting from simple cleaning services and ending with the creation and promotion of sites. Such companies have been individually approaching each client company for many years, and thanks to this they have been leading in the outsourcing market for many years. 

What is outsourcing in simple terms? Definition, meaning, types and examples

One of the good ways to increase the efficiency of the workflow and to achieve a greater return from the staff is recognized as the principle of the division of labor. However, not all enterprises can afford to create a large staff of narrow specialists, because their salaries are far rather big.

An excellent alternative is available to such organizations: they can delegate (delegate) to a representative of another organization some functions that do not have key value. This delegation is the answer to the question of what is outsourcing.

In simple terms, the process can be described as the involvement of a specialist from the outside. 

Outsourcing features

An outsourcing company, which is accepted for the implementation of these obligations, concludes an agreement with the company-customer. Long-term cooperation is of interest to both enterprises, as it is mutually beneficial.

There are full and partial outsourcing. Speaking in simple words:

1. Full - the outsourcing company assumes the performance of all functions in any area.
2. Partial - recruited staff must perform only certain procedures or activities.

Despite the fact that this concept is relatively new for domestic businessmen, many have already managed to evaluate how convenient and economical outsourcing is.

What it is? The types and examples include the following: attracting a company to fully service an enterprise’s computers is a complete outsourcing.

However, in the case of partial transfer of responsibilities for the repair or monitoring of the state of the software, and other tasks remain for the staff member. For example customer service outsourcing for startups.

About types of outsourcing

In the course of the activities of modern enterprises, it may be necessary to have the following types of outsourcing:

• Production is the transfer of another organization to perform any production task. As an example, most advertising agencies. They entrust the printing of printed products to specialists (banners, flyers).

• To save on the purchase of additional equipment and expand their capabilities, it is extremely important for such enterprises to know what outsourcing is. In simple terms, this concept can be described as a reasonable economy. In the field of IT, this type of outsourcing involves the involvement of organizations for the creation of websites, maintenance of equipment, which is at the disposal of the customer or for the development of any type of software with its subsequent maintenance.

A good example is retail chains that do not have programmers on their staff, but on a contractual basis they attract an outsourcing company to create and maintain their websites.

• In the area of ​​conducting business processes, if it is necessary to regularly perform small amounts of work with documents or with personnel, an appropriate outsourcing company is involved. What is it in simple words? This is an accountant, economist or business coach, not included in the number of permanent employees of the enterprise. The hired specialists perform work related to payroll, accounting, legal or consulting services, auditing, and recruitment.

Benefits of outsourcing

Among the advantages of the phenomenon of outsourcing, the company's elementary ability to concentrate its efforts on the core activities.

That is, an enterprise can do only its own production without distraction to secondary tasks (for which specialists are invited).

Also important is significant financial savings. It is due to the fact that it is possible to reduce investment in resources and refuse to train and maintain unclaimed employees.

Thus, outsourcing becomes a significant saving factor.

What is it in simple words: the invited specialist does the work faster and with better quality. Some enterprises have noted a decrease in costs by 20%. In addition, new ways of strategic partnership offer new opportunities for all participants.