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Outsourcing: a Fashion Trend or a Business Process Management Tool?

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Outsourcing as an effective tool of business process management in the organization today is talked about a lot: the discussion in the print media, the constant advertising in the Internet, the organization of all kinds of conferences on the development of this direction and much more. 

Companies that offer this service emphasize amazing (if not fantastic) benefits for clients.

Potential customers themselves are afraid of the risks associated with the use of this management tool. What does the concept of “outsourcing” entail, and are its advantages so strong in comparison with the disadvantages?

To investors: the concept and types of outsourcing

So, outsourcing is the transfer by the customer company on the basis of a contract of any business processes (often auxiliary) for the service of another organization, usually highly specialized in a certain field.

As noted by analysts, the distinguishing features of outsourcing (as compared with, say, maintenance and support services) are:

  • rather long-term nature of cooperation (contracts are usually concluded for at least 1 year);
  • the presence of a specific business process that is transferred to the outsourcer for service;
  • the contractor has delegated the functions of professional support and improvement in the efficiency of the work of the company’s individual systems.

The main advantage and, in fact, the main idea of benefits of outsourcing to India as such is the cost-saving that takes place when there is an increase in the effectiveness of the organization as a whole. It is achieved, of course, by freeing up additional resources (financial, organizational and human) as a result of the transfer of a number of auxiliary processes to a third-party organization. Hence, the possibilities of competent investment: the development of new directions, diversification, maximum concentration on the problem areas, etc., depending on the strategy you choose.

If we talk about the types of outsourcing, then traditionally distinguish:

Manufacturing outsourcing. Here it is a question, of course, about the full or partial transfer to the executor in the face of a third party organization, the powers to perform the basic manufacturing processes.

IT-outsourcing. Delegation of the highly specialized company to address issues related to the IT-sphere of the company. Here we are talking about the development, implementation, maintenance of information systems and software. This may also include programming services, testing, hosting, etc.

Business Process Outsourcing (BPO). It assumes using of external resources of the executor (scientific, technical, organizational, informational etc.) for organization and providing own specific functions and achieving strategic business tasks of the company.

Knowledge Process Outsourcing (KPO). One of developing types of outsourcing. It is understood as the transfer of management of processes requiring deep study and analysis, labor and energy-intensive processing of large data sets, formation and management of knowledge bases, which in the future can be used in making strategic decisions.

It is noteworthy that the range of processes transferred to external performers is constantly growing.  So, today the most popular forms of interaction between customer firms and providers (outsourcers) are the transfer of processes associated with:

  • the processing of constantly growing (if the company is successful, of course) client documentation;
  • the inventory of both fixed and current assets;
  • bookkeeping issues and calculation of tax liabilities;
  • legal support of the activities of the organization;
  • management and marketing of personnel;
  • management of logistics, delivery, issues related to ensuring the smooth operation of transport;
  • project management, from the design stage through implementation and execution;
  • production of both the product as a whole and, possibly, of its individual components;
  • certain marketing and PR-management issues;
  • information systems and database management;
  • translation services;
  • cleaning and maintenance.

In any case, this list can be indefinitely extended if the outsourcing company is willing to provide you with the services you require, and you, in turn, are willing to trust the latter in this matter.