What Is Outsourcing And How It Work
What Is Outsourcing And How It Work!
In Today Post let’s talk a little about what is outsourcing and how it works and what it can do for your business.
We will examine some of the key elements of outsourcing to help you develop a better understanding of the concept of outsourcing.
Outsourcing is a term that has received a great deal of attention lately. Despite the increasing trend in businesses relying on outsourcing there are still some who don’t clearly understand what the term “Outsourcing” actually means.
What is outsourcing and how it work?
This is the most common question that many people have about the subject of outsourcing. Before you can dive into the more complex aspects of this business strategy it is important to have a basic understanding of the process.
In the simplest form outsourcing is when a company delegates the completion of certain tasks to an individual not employed directly by the
company. This individual may be an independent contractor or an employee of another company who is subcontracted to complete these tasks. In exchange for the individual’s services, he or his company receives monetary compensation.
This description of outsourcing makes it far easier to understand the concept. Most people incorrectly assume outsourcing only applies to situations where large corporations have products manufactured overseas by a subsidiary and don’t realize examples of outsourcing can be seen just about everywhere in corporate America.
Domestic outsourcing refers to outsourcing where both the primary company and the independent contractor or subsidiary are located in the same country. One of the main reasons for outsourcing is to reduce costs but it is not always necessary to outsource work overseas to reduce costs. Cost savings will be discussed in greater detail in the section on the benefits of outsourcing but essentially outsourcing results in a savings as a result of a reduction of labor costs.
Overseas outsourcing is the type of outsourcing most people already understand. This is where large corporations such as Nike, and even some smaller companies, employ manufacturing plants overseas in third world countries to upsize their profits. This is significant because their costs including wages, materials and building lease would be considerably higher in the United States than they are in these other countries.
Now that you have a clearer understanding of the concept of outsourcing let’s go over some of the main benefits of outsourcing.
You may still be wondering why companies would go to the trouble of outsourcing certain tasks. Outsourcing is popular because there are a great deal of benefits to the companies who outsource the work.
Some of the benefits include:
– Reduced labor costs
– Reduced workload
– Increased workforce
– Greater flexibility
One of the main reasons companies resort to outsourcing is it can significantly reduce costs. In the case of overseas outsourcing of manufacturing tasks, costs can be cut dramatically because there are lower wages and costs associated with managing and maintaining the manufacturing plants.
However, companies also enjoy a cost savings when they outsource tasks domestically. Reduction of labor costs is the primary source of savings in this case. Independent contractors hired on a contract basisfor the purpose of completing specific tasks are often not given benefits such as social security, Medicare and workers compensation.
Another benefit of outsourcing is enjoying a larger workforce and a reduced workload, without actually hiring additional employees. Businesses who maintain networking relationships with qualified individuals have more opportunities open to them because they are able to rely on these individuals to assist them if they acquire large or complicated projects.
Finally, outsourcingwork gives a company a great deal of flexibility.
Companies who have a significant workload and backlog of work where the majority of the employees are highly utilized might be hesitant to compete for new work because they do not have a great deal of employee availability. However, with a network of individuals to rely on if the need to outsource arises, the company has more flexibility in pursuing new work.
Before starting to outsource daily activities, you should develop a plan for managing all of your outsourced business activities. This plan should include the following:
– Method for selecting candidates to handle outsourced work
– Method for overseeing work performed by independent contractors
– Method for evaluating the work performed by independent contractors
Once you have your plan in place you will want to start looking for professionals that you can hire to outsource your work to. The best place to get outsourcing professionals is on online job sites. Here are a few places that you can begin your search to get outsourcing work in no particular order.
oDesk – http://www.odesk.com
eLance – http://www.elance.com
GetAFreelancer – http://www.getafreelancer.com
EUFreelance – http://www.eufreelance.com
Guru – http://www.guru.com
PeoplePerHour – http://www.peopleperhour.com
LimeExchange – http://www.limeexchange.com
RentACoder – http://www.rentacoder.com
GetACoder – http://www.getacoder.com
ScriptLance – http://www.scriptlance.com
On each of these sites you will find various job categories. When you have a particular work requirement, all you do is post your project in the relevant job category and people who are interested in accomplishing the task for you will apply and make their bids for the job. While each site is different the concept is simple, and because the people who apply are genuinely looking for work you can be sure that you will receive plenty of capable applicants to choose from.
I hope today’s post about what is outsourcing and how it work was helpful to you.
Best Regards,
