You think you know everything about outsourcing? Think again.
Sure, you may have an idea of what outsourcing means from a 30,000 ft. perspective — and the numerous benefits it brings to organizations — but did you know that outsourcing can be classified into four types?
Types of Outsourcing
Outsourcing had its early beginnings in the Philippines back in the ‘90s with the first ever call center operating in Manila. The first venture was a phenomenal success that it lead to the opening of many BPO companies which has grown to be the thriving industry that it is today.
It currently employs approximately 1 million Filipinos and is projected to increase employment by providing a total of about 1.3 to 1.5 million new jobs in the next two years. Said employment opportunities can be classified into the following four types:
This may also be referenced as Business Process Outsourcing which also happens to be the most popular type of outsourcing.
It involves providing specialized services such as accounting, legal, recruitment, employee relations, and standard office functions similar to data encoding and providing administrative assistance.
Professional outsourcing brings tremendous savings to organizations as it reduces overhead costs. It also provides access to a global talent pool at desirable labor rates.
This is the oldest, but certainly not less relevant, type of outsourcing.
The manufacturing outsourcing concept aims to significantly reduce production cost by hiring an outside company, usually located in countries with a relatively low cost of living. It also seeks to make use of assets like resources, equipment, property, which are already in place without having to invest in fixed assets.
Manufacturing outsourcing also results in faster turnaround time in production and assembly of products. A great example are the likes of Nike and Apple who have long been outsourcing their manufacturing to companies in China.
Information Technology Outsourcing
The outsourcing industry in the Philippines is much similar to a two-sided coin. On one side is the BPO industry; the other side is the IT industry.
With the world increasingly getting digitally connected, the demand for IT services has been growing steadily alongside it.
IT outsourcing, similar to BPO, is gaining traction because it addresses the need to have access to IT experts at affordable costs.
Terrific examples are giant, successful companies Google, WhatsApp, and Skype who have been outsourcing IT developments tasks to offshore developers for years.
IT outsourcing also helps companies save on equipment costs since there is no need to invest in state-of-the-art technology, and it’s maintenance.
Most importantly, outsourcing IT support makes it possible for organizations to devote their time and effort to core business functions.
In instances where an organization requires professional services on a short term project
like website design or perhaps even a seasonal campaign, this leads to project outsourcing.
This type of outsourcing involves the hiring of workers or professionals for a specific and time- bound tasks or endeavors.
Project outsourcing came about because this business strategy allows companies to work on projects right away. No time is wasted in looking for local talent to fill in the position temporarily. Plus, hiring professional services remotely are cheaper compared to bringing in someone in-house.
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