Outsourcing 101: Types, Pros, Cons, and Much More – Dekh News

Outsourcing is a practice in which companies hire remote contractors to perform a particular task or provide a service that a domestic worker previously provided.

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Initially, this method was used to cut labor costs. But now, with the rapid development of technology, companies outsource for many different reasons. It could be to utilize the expertise of an overseas expert or to lower the workload to pay more attention to the core tasks.

Companies can outsource a range of tasks. Based on the kind of work, outsourcing is categorized into different types. Let’s see what these types are and

Outsourcing – A General Overview

Outsourcing is a very vast term. Commonly, it is used for a particular task, job, service, or duty that can be performed by a domestic employee but instead is given to a contractor who does not work in your firm or office. You can save equipment, technology, and office-related expenses by assigning the task to a contractor at a lower price.

Running a business smoothly requires better management, productivity, efficiency, and much more. By outsourcing non-core tasks, you can put more focus on essential tasks. All in all, you will become more productive and will start handling deadlines effectively.

Different Types of Outsourcing

Outsourced work can be anything that a person can perform in-house. It could be anything like IT support, bookkeeping, blog writing, data entry, preparing presentations, or customer service. Depending on the type of work, outsourcing can be divided into the following common kinds.

IT Service Outsourcing

Technology has evolved a lot with time. Every day there is a new or updated version of software etc., released in the market. Companies have large data, and handling it requires extensive manpower. That is why most of businesses take the help of the third-parties to manage their IT work. Even online giants like Google and WhatsApp outsource their IT work.

Data Entry Outsourcing

Data entry outsourcing is another common type of outsourcing. In this kind, businesses hire external help to manage data entry operations. People of the low-cost countries are usually hired for this job. Click here to learn more about data entry outsourcing.  

Manufacturing Outsourcing

Manufacturing outsourcing is growing with time. Instead of hiring in-house employees and buying types of machinery, companies outsource the manufacturing task to the parties that are more skilled in this field. A company requires a variety of stuff (tools, licenses, raw materials, etc.) to start making products on their own. So, manufacturing outsourcing saves their money as well as time significantly.

Financial Outsourcing

Financial outsourcing involves assigning different financial activities of a company to a third-party. It could include bookkeeping, tax and consulting services, accounting services, financial analysis services, and much more. Today, many companies outsource their financial activities to offshore workers. They do not have to worry about handling their day-to-day finance-related tasks.

Customer Service Outsourcing

When tasks related to customer communication are assigned to a third-party service provider, then it is referred to as customer service outsourcing. You get more time to work on your company and help it grow while the third party efficiently handles your customers. Many healthcare, education, and manufacturing industries prefer customer service outsourcing.

Outsourcing Pros and Cons

Outsourcing can be advantageous as well as disadvantageous. It highly depends on whether you are clear about your outsourcing needs or not. It also depends on who you assign the task to and when you do it. Let’s go through the pros and cons of outsourcing to understand it deeply.

Pros

Reduce Operating Cost

Many businesses outsource tasks to reduce their operating cost. They do not have to buy resources like equipment, tools, technologies, etc., for an in-house employee. The person they outsource the work to already has the necessary items required to perform the task.

Enhance Company Productivity

One key advantage of outsourcing work is you become more focused, attentive, well-organized, and productive by sharing your workload with others. You can give more time to the fundamental tasks.

Save Time

Outsourcing allows you to assign tasks that need extensive manpower to a third-party. It can save you time and boost your company’s output as you get more time to handle the crucial operations and processes. You can save employee recruitment time and instead spend that time doing something more fruitful.

Build a Talent Pool  

Another great advantage of outsourcing is that you can let the professionals and experts handle the particular tasks and get multiple benefits from their talents.

Cons

Threat to Confidentiality

To hire a third-party to handle specific tasks, you will have to share your company’s secrets, strategies, and other confidential terms with them. If the third-party is not trustworthy, then it can put your business at risk.    

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