Outsourcing is a business practice in which services or job functions are farmed out to a third party. In information technology, an outsourcing initiative with a technology provider can involve a range of operations, from the entirety of the IT function to discrete, easily defined components, such as disaster recovery, network services, software development, or QA testing.
Companies may choose to outsource IT services onshore i.e within their own country, nearshore i.e to a neighboring country or one in the same time zone, or offshore i.e to a more distant country. Nearshore and offshore have traditionally been pursued to save costs.
The business case for outsourcing varies by situation, but the benefits often include one or more of the following:
Some of the risks include:
BPO is an overarching term for the outsourcing of a specific business process task, such as payroll. it is often divided into two categories: back-office BPO, which includes internal business functions such as billing or purchasing, and front-office BPO, which includes customer-related services such as marketing or tech support. Customer support outsourcing is also a subset of BPO.
While most business process outsourcing involves executing standardized processes for a company, knowledge process outsourcing (KPO) involves processes that demand advanced research and analytical, technical, and decision-making skills such as pharmaceutical R&D or patent research.Categories: