Outsourcing is a business practise in which services or job functions are farmed out to a third party. It is the strategic utilization of external resources and workforce to complete tasks that were traditionally handled in-house by the
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Outsourcing is a business practice in which services or job functions are farmed out to a third party. It is the strategic utilization of external resources and the workforce to complete tasks that were traditionally handled in-house by the staff of a company.
Outsourcing is the process by which a company seeks or requests the support of an external firm to help or handle specific tasks so that they can remain focused on the core, most important aspects of their business.
To further break it down, depending on your size and workforce knowledge, you might be considering using outsourcing for payroll and accounting, HR and onboarding, insurance-related tasks, customer service, or even with help in different parts of your sales activities.
Business Processing Outsourcing (BPO) market size is expected to reach $405.6 billion by 2027.
There are typically two large categories of services that can be outsourced:
For instance, you are an E-commerce business or a health care service provider; your core strength lies in selling the best products online or delivering best-in-class healthcare services. But there are other important parts of your business like payroll processing, IT infrastructure, Customer support, Logistic support management, warehouse security, etc.
In order to handle these on your own, you may need to employ many full-time employees, which would prove to be way out of your operating budget! So what do you do? Employ all the manpower you need and wait for the creditors to come knocking? Or, will you switch to a better and practical solution at a low cost to outsource your business from someone who has the expertise and resources for it?
It’s important to consider which location would be the most beneficial for your outsourced operations.
In Onshore outsourcing, vendors operate within the same country as the contractor, although they may be located in a different city or state. Onshore outsourcing, also known as domestic outsourcing, is the obtaining of services from someone outside a company but within the same country. This domestic presence enables clients to leverage the incredible local talent pools, convey a strong cultural fit between end-users and employees, and deliver delightful customer experiences.
The ultimate goal is to add a seamless extension of your team with expertise, not currently present in-house. An onshore outsource partner is beneficial if you prefer a partner in your time zone and want to work within the same legal jurisdiction.
Communication is typically a lot easier and more contoured when your outsourcing partner is geographically close by, and the possibility of personnel assignment on your site is greater with an onshore provider.
If you need to straighten out a problem in person, it’s much easier to meet with an onshore service provider. It’s expensive to visit overseas providers, in terms of travel costs and time lost. Besides, an organization will likely save on project management as onshore projects need much less management than projects done overseas.
It is easier to deal with quality control issues. If a company must train its supplier or service provider to work in a specific way, it’s easier to meet in person to understand what’s required.
The cost of outsourcing is mainly related to the economic environment in the locale of the provider. Despite certain other advantages of onshore providers, their cost is generally multiples of an offshore provider.
Problems such as cultural or language barriers will be markedly less with an onshore outsourcing firm, but there is still the potential for miscommunication due to corporate cultural factors, differing technologies or business practices with an onshore outsource partner.
In Offshore outsourcing, vendors are located outside of the company’s own country. It can be defined as the system of collaborating with an external organization and assigning that organization to carry out some of your business roles. Besides, technological improvements, it has been the decades of productive offshoring that has lowered the costs of consumer goods such as clothing and electronics. Offshoring does not only relate to the production of physical goods but also services. Offshoring the potential to save money for both sellers and consumers.
The Indian IT industry, for instance, has been powered by waves of offshoring by technological companies in the West.
Whereas an onshore outsource partner may face the same difficulties you have acquiring much-needed talent, offshore providers pull from an entirely different talent pool and may have a ready pool to tap. Additionally, their resources are likely to be working under different creative forces, which can lead to new solutions to fulfilling your expansion goals.
Offshoring is significantly less expensive. While an onshore provider will share much of your cultural, technological, and legal context, offshore providers can offer additional benefits to companies desiring to globalize their products. Choosing more offshore outsourcing firms in preferred markets will indirectly carry your presence into a new foreign market. This situation would be especially valuable if your company needs local customer support there, values insights into cultural modifications of the product, or requires maintenance of local infrastructure.
The architecture, design, development, testing, and deployment of your project are the essential aspects of your software process, and the degree of control over what you hand an outsourcer is inversely related to their distance from you in space and time. Most companies prefer to keep the planning and design phases close to home. This is something to keep in mind when deciding how much process control to cede to a Third-party professional.
Nearshoring is a process of transferring business operations to another country is located nearby. Nearshoring by definition is the delegation of business operations to nearby countries. In other words, it is outsourcing, except it focuses on outsourcing to countries close to the business’s country. For instance, a European company passing their business operations to a company in a fellow European country would be considered nearshoring.
Assigning part of your company’s businesses to another country’s specialists might significantly lower your expenses, as, for instance, third world countries, offer lower prices and significantly higher services.
Most East European countries offer specialists with high profile education and at least several years of experience. That implies the high quality of the outcome of your business collaboration. Nearshore outsourcing allows you to have the same time zone as your trustee or at least the closest one. This way whenever you need to personally travel to your outsourcing team or contact them, the whole process will not take longer than a few hours. Also, No cultural and language barriers, easier to conduct business when you do not have many differences in those two fields. Easier work with documentation and can also be used as a great tool to enter a foreign market, therefore expanding your company’s territory.
It is a little expensive then offshoring. For example, from an American company’s perspective, the countries they would nearshore to would be Canada or Mexico. This may be more economical than hiring Silicon Valley developers but is still more expensive than Indian or Chinese developers.
There will always be a certain amount of cultural differences. For example, between the US and Mexico, one speaks English and the other Spanish. Hence, this may already create miscommunication between the team.
You are limiting yourself to suppliers that are geographically close to your region, leaving out countries on the other side of the world. This limits your options, making it tougher to find the right partner for your company.
These refer to different distinguished forms of outsourcing:
In business process outsourcing (BPO), entire company processes are outsourced. It involves getting a third party to handle certain operational functions such as customer services, payroll, accounting, inventory, etc. For example, you can have your employees’ payroll created by an external service provider. From hiring to total process management including meeting the process KPIs, everything will be done externally.
Knowledge Process Outsourcing(KPO), complex tasks are outsourced to a third-party company. It requires more advanced technical skills. Services that can be outsourced under this category include data research and analysis, content writing, research and development, intellectual property, and legal services. For instance, the preparation of search engine optimized texts for your business website. The respective outsourcing partner company usually has trained experts with a high degree of specialization.
Legal Process Outsourcing (LPO) is a lesser-known concept among the non-legal community. To explain this, for example, Lawyers in Europe, USA, Singapore, Dubai, etc charge a lot of money on an hourly basis. To reduce the expenses, many corporations send their legal work over to less expensive countries like the Indian subcontinent, where it can be done in a fraction of the cost. The companies receive this work and allot it to law graduates employed by it. These law graduates accomplish the required work and send the finished documentation to the client abroad. All the work and exchange of information in the LPOs takes place online. The LPOs get paid by the foreign client for the work accomplished.
Manufacturing Outsourcing consists of hiring people outside of the company to assemble parts of or build an entire product. The main reason why companies choose to do this is to cut costs. Labour is often among any company’s largest costs. Outsourcing parts of the production line to a third party in a lower cost location leads to a significant decrease in production costs. It is more affordable to outsource production processes to companies that have a comparative advantage in that area than to produce them internally. Many times one of the greatest advantages of outsourcing is to utilize assets such as plants, property, and equipment already in place without having to invest in fixed costs.
With outsourcing, one or more tasks or processes are usually given to an external partner. Under certain circumstances, however, some tasks are performed internally. For instance, if you have given a task to a different department of your company which specializes in it, this is commonly known as internal outsourcing. In contrast, a task given in its entirety to an outside company is known as external outsourcing. The external company may be based on regionally or maybe a foreign contractor. The focus is on potential cost savings. To give you an idea of business outsourcing services and worldwide trends, we’ll discuss some of the biggest players in the space.
It is a highly complex and regulated area where you need reliable quality to safeguard your business. By outsourcing customer support, you get a team that’s prepared around the clock, eager to turn a customer’s potentially negative experience into a positive one. Outsourced customer service resolves the business need for support coverage and ensures that the consumers’ needs never go unaddressed. From providing delightful customer experience to meet the process KPI’s successfully, a customer service outsourcing becomes the catalyst to improve the client experience and grow their customer base.
Outsourcing customer service is often a less expensive alternative to hiring full-time customer service staff. Businesses that outsource customer service can see financial relief in utilization and the costs of agent attrition. Additionally, an outsourcer can offer flexible and affordable staffing options, including a price structure that charges per resolution.
Outsourcing allows you to out-service your competitors by offering extended after-hour and weekend support.
Companies that outsource customer service can expand their customer base by adding more language options than just English. For many, the opportunity to have full coverage in multiple languages without having to manage it all is worth more than the basic cost benefits.
More hands-on-deck means a significant reduction in response times, which is the main driver of customer satisfaction and saves your business from bad reviews online.
In associating up with a customer service outsourcer or contact center, you’re getting access to the latest technology and a pool of resources you might not otherwise be able to invest in.
Sales Process Outsourcing is a great way to garner additional sales for your brand through a third party. What an outsourcing partner can do is set your team up with the best possible leads and information to make closing as easy as possible. SPO is all about acquiring customers by filling the sales funnel. The main focus here is to enhance your landscapes. Sales providers will have a specific list of marketing tech platforms they use to hunt for your leads.
You set the lead and company requirements so your specialist can even start the outreach. By using company emails and LinkedIn accounts that you provide, the lead will never know that your incredibly efficient sales process is coming from outside your company. This makes the handoff to your sales team invisible to the customer.
In addition, when your partner has sales specialists on hand, they can flag exceptions to send right to your team so you get a prized lead and can address their unique needs. It’s all about helping you focus on revenue and using every day to grow.
Catalogs need to be attractive and credible to the customers. This helps the business to be in the eyes of the target audience and improves brand identity. Cataloging is imperative in business for detailed information about your brand products and services.
It maximizes your product value by categorizing & indexing the offerings, ensuring immaculate product listings & tagging.
A scalable content moderation process lets you publish high volumes of user-generated content and screens through the maleficent i.e hate, racism, violence, sexuality, or anything else that the platform doesn’t subscribe to or endorse.
Outsourcing partners makes it easy with the synergistic approach of human moderators, Artificial Intelligence and Machine leanings make moderation quick and painless. From screenings of content to cataloging, from contextual tagging to precise content annotation and labeling, the best minds are using the best of AI and ML to create a more delightful experience for the consumer in the platform.
Back office outsourcing is the act of outsourcing one or more back-office services to third-party service providers. This is done to help companies lessen their expenditures on acquiring more office space and the cost of hiring and retaining employees. Most of the functions outsourced are recruitment, human resource, accounting, payroll, and IT.
These back-office outsourcing services are deemed important to run a company smoothly. It is essential to maintain back-office operations. But, it is easier and more economical to hand over these services to a third party that specializes in these functions. Thus, for companies to save on office space and the cost of hiring and retaining a group of people with higher salary fees, they have opted to outsource back-office functions.
Enterprise e-Surveillance can be outsourced to third-party service providers to:
With managed services to monitor, detect, and alert in case of emergencies, enterprise e-surveillance services are designed to keep the safety of a workplace in mind. A managed services provider sets up a team to watch over live and recorded footage of operations, to alert authorities or the personnel incharge of any suspicious activity; saving a brand the time and resources spent in building a team and command center to do the same.
The average interview process for a single position takes roughly three weeks at most mid-sized companies around the world. And that’s where organizations need to have a dedicated HR professional on staff. If you’re hiring via executives within a non-HR department, it takes longer and you’re less likely to find the most qualified candidates.
Human resources process outsourcing aims to resolve that issue by taking care of mass recruitment for a business. It allows you to quickly connect with top talent and get them interested in your company and openings. All you have to do to get the ball rolling is set up the job title and its needs, then your outsourcing partners can create job postings, lists of candidates and sort everyone based on job criteria.
Outsourced human resources team will immediately start adjusting and you’ll quickly get a list of high-quality candidates ready to interview.
This can be defined as creating to-do lists and booking travel or generating basic legal agreements, managing specific databases or spreadsheets, and generating in-depth competitor research.
Nearly every person, office, and growth function can be outsourced, at least in part. You will never want to stop performing core business activities, but you can use so you would like outsourcing to take away as much of the other noise as possible.
With specialized personnel trained to ensure optimum efficiency, outsourcing becomes much more than just cost saving.
Outsourcing allows you to leverage the many years of experience and advanced business practices of the hired firm to help grow your business quickly. Their knowledge and understanding, coupled with the many years of experience they bring, ensure the job is done to the best of standards. This invariably results in greater efficiency and greater productivity. It would certainly reflect on your company’s bottom line.
More than 37% of small businesses outsource to improve efficiency.
One of the main reasons why businesses opt for outsourcing is fewer costs. Outsourcing converts fixed costs into variable costs, releases capital for investment elsewhere in your business, and allows you to avoid large expenditures in the early stages of your business. Outsourcing can also make your firm more winning to investors since you’re able to elevate more capital directly into revenue-producing activities.
Hiring and training staff for short-term or external projects can be very expensive, and temporary employees don’t always live up to your expectations. Outsourcing lets you focus your human resources where you need them most.
Outsourcing specific tasks to third-party professionals free up time and energies so you can channel them into building your brand. You can also use this time, energy, and money to invest in research and development while ensuring that you offer your clients better value and services.
There would be little or no need to invest in certain infrastructure if you outsource some of your processes to a third party company. The business partner you outsource jobs to would take responsibility for the infrastructure needed to execute it.
You won’t need to employ & train staff. We all know that it can be tedious and expensive to expand your customer support. Maxicus, will handle all your customer support needs and keep your customers coming back for more. We employ world-class business practices which we have developed over the years, as a result of catering to different clients from all over the world.
Every business investment carries a certain amount of risk. Markets, competition, government regulations, financial conditions, and technologies are in perpetual change. Outsourcing providers assume and manage this risk for you, and they generally are much better at determining how to avoid risk in their areas of expertise. Offer your clients better deliverables while minimizing the time it takes to reach the marketplace. Outsourcing helps small firms act big by giving them access to the same economies of scale, efficiency, and expertise that large companies enjoy.
Transformation in the global market is changing the outsourcing business. Businesses now engage companies that offer outsourcing services in the cloud or prefer to manage these services in-house. The majority of outsourcing clients are looking for much more in terms of services than contemporary offerings. BPM clients are not reluctant to increase spending for better service relationships; what they want is high-quality, reliable service.
The latest research has also shown that 52% of small businesses will continue to outsource throughout 2020.
Service innovation is shaping expectations on how services are delivered within the organization. Client experience has shown that outsourcing and innovation are often conflicting. The reason is that buyers expect highly reliable service at a low price when they buy from an outsource partner. For a long time, the BPO industry was seemingly disinclined to the adoption of creative and disruptive innovations due to the high initial cost of new technology, training time required. But outsourcing clients today expect high-value innovative services from third-party providers. And outsourcing companies will need to adopt perpetual improvement processes through new technologies.
The future growth of the customer care outsourcing market will be kindled by higher-value services that address business outcomes through consulting, planning, and analysis.
“While there is a setback in the industry, India happens to be the den of innovation.”
The days of traditional BPO processes and tools are finally get dumped. The onset of rapidly evolving new technology has led us towards smart Business Process Outsourcing.
India has been a far standing leader of all the outsourcing hubs in the world. Over 75% of the world’s digital talent resides in the country.
Related resource: Outsourcing in India: The hub of IT Support, Talent & Innovation
Many companies outsource their non-core business processes to offshore locations such as China, Philippines, India, and other countries. Outsourcing not only helps in controlling cost but also facilitates to improve quality, decrease time-to-market, and stay ahead of the competition.
According to Forbes, 80% of US and European outsourcing firms have ranked India as their topmost destination for getting their work outsourced.
This is all because India offers unmatched quality services at cost-effective prices with the fastest turnaround time. The best reasons to make India a preferred outsourcing destination are favorable government policies, fast-developing infrastructure, and an immensely talented workforce. India is fully capable of handling complex turnkey projects effortlessly utilizing its skilled resources and technology. The following are some fundamental reasons that make India a preferred outsourcing destination:
The Indian government takes initiatives to promote India as a safe and secure outsourcing destination for worldwide outsourcers. The Government of India has IT sector development in its top priority list and is implementing various IT Action Plans to promote the growth of Information Technology in India. Moreover, India has cyber laws to control criminal activities and deliver hassle-free services to global clients.
India has a population of over 1.2 billion people and every year approx 3.1 million students hold a degree of graduation from Indian universities in different fields. The talented workforce enables India to deliver quality services in various sectors. According to PwC, India has one of the fastest-growing talent pools for IT and ITeS industries.
India is one of the largest English speaking nations in the world. According to a study in 2019, India is ranked 5th among Asian countries for proficiency in English Indian people are fluent in the English language and it encourages outsourcers to choose India as their outsourcing destination.
In India, you get a committed workforce to work on your ongoing projects. Most of the companies in India work 8 hours a day and 6 days a week. Also, dedicated teams of Indian outsourcing companies can work around the clock to meet short project deadlines.
A range of low-cost pricing options makes India a top outsourcing provider for global outsourcers. The companies in India offer their clients per hour, per lead and fixed monthly prices so that they can choose the best-suited option.
Low cost is not the only reason which makes India a top outsourcing destination. The consistent high-quality services provided by Indian firms have also enabled India to remain the first choice of outsourcers. When you choose India as your outsourcing destination, you become eligible for significant cost savings, fastest turnaround time, and optimum quality.
Today, India is one of the 5 fastest growing economies in the world. India is a well-developed country that employs its homegrown technologies in all sectors. Outsourcing companies in India offer their clients the best solutions utilizing the latest equipment or software. Besides, most of the Indian companies have high-speed internet bandwidth to maintain constant support and communication for their clients.
After you have decided to outsource some of your business processes, the next step is to ensure you find the right outsourcing partner, who will look after your interests for you and thus guarantee your success in the future. This is a very important decision to make, because if you choose the wrong company, who are not experienced, quite simply do not know how to go about this, or have their agenda set as a higher priority than serving you, then the results could be catastrophic for your company.
Here are some crucial factors to be considered before choosing an outsourcing partner:
Make sure the organization you have set your sights on has been on the BPO market long enough to prove its reliability. Check the company’s success rate and what is their experience and history?
You need to look up what kind of projects the Company has completed in the past. This will give you an overview of what their main focus has been on and if they have done similar projects to the one you are about to outsource to them.
Surely one of the most important parts of your relationship with your outsourcing partner is maintaining a good level of communication. They need to interact flawlessly with the team members from your side, as this has a huge impact on the overall success of the business relationship.
Being able to supply you with solid references is another important factor that your chosen company should be able to provide. Were their clients satisfied with the results accomplished? Are any of them still using the company? Most outsourcing providers have a list of references with a variety of clients as well as case studies on their websites.
Once you have verified the credentials, it is important to understand whether or not the company has the technical knowledge and project experience to meet your requirements. It is crucial to know what are the processes the company follows and what methodology they are using to track results and resolve issues.