Outsourcing Services

Outsourcing is a process by which a company or an individual enters into a contract with an individual or another company for specific tasks, i.e. to do a specific function. Studies show that many organizations outsource generally non-core functions of the business. For instance, landscaping operations and janitorial operations of insurance companies can be outsourced to firms that specialize in these types of work. The firms that normally offer outsourcing services are third party providers and are called as service providers.

In the recent past, organizations began to utilize outsourcing services even for functions like billing, data entry and payroll. These narrow functions are generally outsourced as they are done effectively by service providers with specialized tools and facilities and also by specially trained personnel.

In the current scenario, organizations look for outsourcing services, either to handle whole operations or distinct business operations like benefits management. The most common form of outsourcing is business process outsourcing (BPO) and information technology outsourcing (ITO). Human resources outsourcing, call centre outsourcing, claims processing outsourcing and finance and accounting outsourcing are included in BPO. Generally these BPO deals involve multi year contracts and the monetary value of these contracts will be millions of dollars. People who are performing internal work for the client firm may get a transfer and become employees of the service providers.

The success of outsourcing depends on three factors: the client's capability to administer service providers, the support from the executive level in the client organization for the outsourcing assignment and sufficient communication. Professionals who are in charge of outsourcing and who work on both the service provider's side and the client's side, need a combination of skills in different areas like negotiation, project management and communication. The professional should have the aptitude to appreciate the terms and conditions of not only the outsourcing contracts, but also the service level agreements. As a professional, above all the points stated, he or she should have the willingness to be flexible to the changing needs of the business. Outsourcing can become very challenging when the work is done offshore, which involves different languages, time zones and cultures a lot of time.