Modern business processes require special flexibility, efficiency and economy from participants in business relations. These rules are dictated primarily by the difficult economic situation, which leaves no time for reflection. This is understood by both owners and managers of companies operating in various fields of business.
Useful tool
One of the most effective and at the same time effective schemes for reducing costs and increasing the effectiveness of work is the use of outsourcing. With its help, the company not only reduces its costs, but also ultimately gets a better product.
Read about the essence of outsourcing, what kind of tool it is and how it is applied in practice, read in this article.
General concept
So, we will begin with the general characteristics of this category. Surely you heard this term when you were told about any business processes of one nature or another. Today, many service companies offer different types of outsourcing, which acts as the main profile of the activities of such business entities.
At first glance, this term (translated from English means something like “search for resources from the outside”) is something difficult for an ordinary person to understand, far from business. Many probably do not even know what this word means, even though they have heard it many times.
Believe me, there is nothing complicated in the outsourcing category. What it is? In simple words, we can say that this term means the transfer of some function of the company to other companies specialized in this field. You will learn more about what this process implies from our example, which is given later in the text.
Good example
So, what functions are we talking about and why should they be transferred to another company?
Imagine that you are the owner of a company that sells flowers. You are well versed in how to grow your products, decorate and sell them. You know all the intricacies of this market, so you are ready to engage in such a thing and develop it.
At the same time, your company will not be able to do without an accountant and a lawyer who will deal with financial reporting, drafting contracts and other technical issues. Of course, you don’t understand anything about this, since your profile is flowers. Since you need specialists in the field of finance and law, you have an easy way to solve the problem: hire such specialists (lawyer and accountant). There are two problems at this stage. First, you do not have an appropriate office. You work in a store, and there’s simply nowhere to put these people.
The second is the high cost. Paying a salary to two more people is a considerable cost. At the same time, you do not need so much from these specialists: one-time preparation of some monthly reports and periodic consultations 1-2 times a month. How to be in this situation? That's right: external outsourcing is your way out!
Scheme of work
Instead of hiring one lawyer and one accountant who cannot physically cover the whole range of your tasks (since they specialize in just one thing and cannot be universal specialists), you turn to an audit company and conclude an agreement with it. On the one hand, its lawyers will process your contracts as efficiently as possible and fill out all the necessary papers; on the other, accountants will be involved in reporting.Since such a company has a whole department of the specialists you need, they will not only faster, but also do the work you need better. At the same time, the cost of company services will be less than two salaries; and the level of service is much higher.
You can cooperate with such a company in the form of a subscription. By concluding a contract for 6 or 12 months of service, you will win. This is how modern companies work. And to be extremely honest, this scheme provides the maximum benefit for you as a business owner.
Types of Outsourcing
In fact, there are many techniques for how to separate varieties of a given model. According to the specifics of the activity, for example, three categories can be distinguished. The first is production outsourcing. An example of this is the use of printing houses by advertising agencies to create printed materials. Of course, having such an own production capacity for the agency would not be so profitable. When you occasionally contact the printing house, you can receive your orders at an affordable price.
The second type is business process outsourcing. It is characterized by the fact that one company completely transfers some function to the service of another. Remember our example with a lawyer and accountant - these are examples of what types of outsourcing are.
Finally, the third category is IT outsourcing. You can already guess from the name itself that the functions of software development, creating websites, writing some kind of software control systems for equipment and others can be transferred within it.
However, this classification is certainly not exhaustive. For example, there is such a thing as outsourcing personnel. It means the transfer by one company to the work of other specialized personnel performing certain functions. A striking example of this is the company that serves supermarkets. They have merchandisers who can as soon as possible arrange products and determine price tags for goods. Due to such companies, the supermarket gets rid of the need to maintain its staff and constantly seek new personnel, fearing that one of the employees will decide to quit suddenly. The same outsourcing of personnel is used in the security and cleaning business, and not only. It allows you to conduct business more efficiently, reducing costs and improving the quality of the final product.
Other classification
In addition to those presented, there are other types of outsourcing. For example, it is external and internal. They differ among themselves by the principle of placement of those who carry out the task. If, for example, in the case of supermarkets, merchandisers work on their territory, then we call this “internal outsourcing”. It is quite logical. If, as in the case of accountants, specialists compose all the papers in their workplaces and simply send them by e-mail, then this is external outsourcing.
Benefits
How positive can an outsourcing system be characterized? First of all, competence and specialization. The specialists of the company from which you order services are clearly much more competent than your employees (for whom this task is not a core one). Therefore, the results of the work may be appropriate.
The next point is the frequency of such work. If you need services on a regular basis, you might be better off thinking of a full-time specialist. If we are talking about occasional consultations, drafting documents and other actions, it is better to contact the company that is engaged in outsourcing.
disadvantages
You should not think that the model described by us is ideal. No, in fact, despite the high level of popularity, outsourcing (what it is, we have already explained in simple words) does not guarantee that the cost of the services of specialists will be lower than in the case of hiring a full-time employee.It may happen that the head of the company incorrectly calculates his expenses and, on the contrary, will pay more. Therefore, working with such a model, you should thoroughly prepare: calculate all the costs, determine the labor efficiency of both hired employees and those who work on outsourcing.
Again, do not forget about the control over the process. It so happens that a company transfers too many of its functions to services according to an outsourcing model. Because of this, in some situations, when you need to urgently perform some secondary function or perform a task that was not originally agreed upon, serious problems can arise.
Therefore, with outsourcing, you need to be careful and remember that when ordering such services, you trust other people to do it, whose vision may differ from yours.
findings
So, in this article we have described the main types of outsourcing, which, of course, may include other types. It all depends on the criteria by which to divide those models that are present on the market today.
In general, we can call such a form of cooperation, as outsourcing, an ideal option for any company. You, as a client, can transfer costly, time-consuming and complex functions for you and your specialists to those who can serve them at a much higher level. Those companies, in turn, can work with several clients at the same time, which also allows us to talk about the wide possibilities of scaling up their business, entering new markets and opening new directions.
Training
As for the specialists working in such companies, for them it is also an excellent experience and an opportunity to try their hand at different niches. After working in one of these firms, they will be able to more accurately navigate in their field of knowledge, will be much more qualified and experienced, compared with those workers whose job is to service narrower areas.
Today, as practice shows, the effectiveness of outsourcing is only growing. Even world industry leaders confirm this by asking other companies for help. Take, for example, Apple - the largest company that could establish its own production of all components for its products. However, it also has many partners who are responsible for different areas of outsourcing. Obviously, this is more profitable and convenient.
