What is outsourcing? Definitions and best practices

Outsourcing ("outside" and "source") is a model of remote recruitment in which the business tasks of the company are delegated to third parties, professionals in a certain field. When outsourcing, the company-contractor often gets access to the business processes, services, systems, and infrastructure of the contracting company.

There are three types of outsourcing depending on the location of the customer and the contractor:

  • onshore – when a client hires an outsourcing company in the entire country where the business is conducted;

  • non-shore – when an outsourcing company is located near abroad;

  • offshore – when an outsourcing company is located far abroad.

Depending on the tasks that are delegated to contractors, we can identify the main types of outsourcing:

  • Professional outsourcing. Specialized services, such as accounting, purchasing, administration, legal services, digital marketing, etc. This type of outsourcing is optimal for scaling the business and for obtaining one-time services.
  • Multisourcing. This is the simultaneous use of several outsourcing providers for different tasks, such as IT and marketing. This option of outsourcing is well suited for businesses, which develops, as well as giant companies.
  • IT outsourcing. This highly specialized type of outsourcing, includes a variety of tasks from support to the development of add-ons and solutions.
  • Outsourcing of business processes. This type is most often used for regular operations: administration, e-mailing, planning, etc.
  • Production outsourcing. Production of products by third parties. This type includes both small businesses that do not yet have sufficient production resources and large companies, such as Apple, to reduce the budget to pay for the plant, workers, equipment, machinery, etc.
  • Outsourcing of personnel. Transfer of the whole or part of the project outsourcing company through the marriage of human resources.

What are the benefits of outsourcing?

Outsourcing has a number of advantages for the business:

  • budget savings;
  • access to the necessary skills and resources;
  • faster achievement of business objectives;
  • increasing the efficiency of processes and functions;
  • minimization of staff issues and disagreements;
  • expanding the capabilities of the company.

What are the disadvantages of outsourcing?

Outsourcing carries risks for the business:

  • lack of involvement in the process;

  • language, cultural barriers and time zone differences;

  • risk of internal information leakage despite non-disclosure agreements;

  • lack of quick reaction to the task;

  • lack of control;

  • possible misunderstandings between the outsourced employees and the internal team.

Outsourcing and Outstaffing: What is the difference?

Sometimes outsourcing can be confused with another popular model of remote hiring of employees: outstaffing. To distinguish between these two concepts, let us define the meaning of the term outstaffing.

Outstaffing (withdrawal of staff from the staff) – a type of remote hiring model, in which the company-contractor provides a professional or a group of professionals to participate in the project for the duration of the contract. Unlike outsourcing, outstaffing allows you to manage employees hired on the outstaff model and fully integrate them into your team for the period specified in the contract.

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