Even though the procedure has been in existence since the thought of division of labor and work delegation emerged generations ago, the word ‘outsourcing’ was not applied until the 1980′s. This means the process of contracting the goods and/or hiring the help of another firm to perform certain activities or aspects of business. Thus, these organizations are generally known as third-party or service providers.
Since then, various bywords or branches of the outsourcing process came into the picture. There’s Business Process Outsourcing (BPO) which usually would take care of payroll services, compensation and benefits management, as well as other functions that aren’t a facet of the key business strategy. Another is (ITO) Information Technology Outsourcing also known as (ITES) IT-Enabled Services which usually specializes in IT related tasks, which includes software development and management, data center and screening procedures.
More spin-offs of the outsourcing solution would be the Knowledge Process Outsourcing (KPO) and Business Transformation Outsourcing (BTO). The former involves solutions that require higher skills and abilities such as legal functions, research and development, and quality assurance; while the latter requires service providers that perform a portion in making more dynamic and flexible projects for the business.
Many more have been around in the past but they are being presented in a new way because of the outsourcing trend, such as Software R&D to build and enhance computer applications, and Marketing Outsourcing ex. advertising agencies to build up the company’s image.
The location of the service provider is also used to classify outsourcing. If your contractor is in the client’s own country, it can be called ‘onshore.’ For all outside the client’s country, they are referred to as ‘offshore’ except when it’s a neighboring country, it becomes ‘nearshore.’
The idea of outsourcing has plenty to do with expertise. Outsourced functions are usually those that aren’t critical or strategic to the business, for instance payroll or janitorial services. You will discover organizations who devote themselves to these kinds of services so you can be certain of sufficient and qualified personnel. Also, outsourced workers would generally mean less costs and headache than being done in-house.
Source:http://thebentpenny.com/?p=692
